Received: 13 April 2018 Revised: 17 October 2018 Accepted: 4 November 2018

DOI: 10.1002/bse.2258

RESEARCH ARTICLE

Sustainable development disclosure: Environmental, social, and

governance reporting and gender diversity in the audit
committee
Francisco Bravo | Nuria Reguera‐Alvarado

Department of Accounting and Financial

Economics, University of Seville, Seville, Spain Abstract
Correspondence This paper analyzes the link between female representation on audit committees
Francisco Bravo, Department of Accounting
(ACs) and specific information attributes of environmental, social, and governance
and Financial Economics, University of Seville,
Av. Ramon y Cajal, 1, Seville 41018, Spain. (ESG) disclosures. We also examine whether the role of women is moderated by the
Email: [email protected]
busyness and intensity of the committee. Our results reveal a positive association
between gender diversity in the AC and the quality of voluntary ESG reporting, which
results in greater comprehensiveness and relevance. These findings extend the
academic debate concerning the role of female directors on sustainability policies.
Moreover, given the importance of ESG information in capital markets and its
potential benefits for firms, this evidence may help regulators and owners to
implement adequate corporate governance mechanisms. In addition, the busyness
of the AC negatively moderates the influence of female AC members. Therefore,
we highlight the need to consider the context in which women work in order to
understand their influence on sustainability reporting.

KEY W ORDS

audit committee, ESG reporting, gender diversity, social and environmental policies, sustainable
development

1 | I N T RO D U CT I O N is known that boards of directors are increasingly expected to take

charge of corporate social reporting (Galbreath, 2018), the role of
In recent years, environmental, social, and governance (hereinafter directors in ESG reporting remains unclear (Jizi, 2017).
ESG) issues have received a great deal of attention from individual This paper aims to fill the gap in previous literature by exploring
shareholders, institutional investors, governments, local communities, the link between female representation on the audit committee (here-
employees, and suppliers (Yu, Guo, & Luu, 2018). As a result, firms inafter AC) and the quality of voluntary ESG reporting by focusing on
have become more sophisticated in their ESG disclosures in order to specific attributes of ESG disclosures. First, the AC is responsible for
satisfy their stakeholders' information demands (Amran, Lee, & Devi, financial and nonfinancial information, and there is an ongoing profes-
2014; Helfaya & Moussa, 2017). In addition, disclosure of information sional and academic debate regarding the need for the AC to oversee
on ESG issues is expected to prove beneficial in capital markets due corporate social responsibility (CSR) disclosures (Al‐Shaer & Zaman,
to reduced information asymmetries and agency conflicts (Cheng, 2018; KPMG, 2017). Yet despite the significance of ESG information,
Ioannou, & Serafeim, 2014; Salama, Anderson, & Toms, 2011). previous research has thus far failed to analyze the impact of ACs on
Addressing ESG issues has thus become critical to both business strat- ESG voluntary disclosures. Second, measurement of ESG reporting is
egy (Lokuwaduge & Heenetigala, 2017) and policymakers (i.e., Direc- a controversial issue (De La Cuesta & Valor, 2013), and previous stud-
tive 2013/50/EU). Consequently, studying the determinants of ESG ies generally measure the extent of ESG information by employing
disclosures remains relevant for firms, regulators, and academics alike content analysis techniques or composite ratings (Giles & Murphy,
(Arayssi, Dah, & Jizi, 2016; Giannarakis, 2014a). However, although it 2016; Ioannou & Serafeim, 2017; Jizi, 2017), with the search for

Bus Strat Env. 2018;1–12. wileyonlinelibrary.com/journal/bse © 2018 John Wiley & Sons, Ltd and ERP Environment 1
2 BRAVO AND REGUERA‐ALVARADO

additional measures of ESG information remaining a challenge in the moderates the influence of gender diversity. Consistent with previous
existing literature (Amran et al., 2014). In this sense, one of the main research (Zona, Zattoni, & Minichilli, 2013), when seeking to gain a
novelties of our paper is its analysis of specific information attributes clearer insight into their influence on ESG disclosures, we emphasize
of ESG disclosures that have been widely discussed by academics, the need to consider the context in which women work.
policymakers, and professional bodies: namely, the comprehensive- The following section provides a literature review and hypothesis
ness, relevance, and accessibility of this information. Third, this study development. The sample, method, and results are then discussed. The
aims to extend the debates regarding the role of female directors in final section reports the main conclusions.
the AC and their potential influence on social and environmental
strategies. Researchers have increasingly questioned whether boards
of directors and board subcommittees may be affected by gender 2 | THEORETICAL FRAMEWORK AND
diversity (Adams & Ferreira, 2009; Mensi‐Klarbach, 2014), and this HYPOTHESIS DEVELOPMENT
discussion has also moved to the political sphere, with many countries
advocating the need to establish quotas for female representation on ESG reporting covers issues that are beyond economic concerns but
boards (e.g., France, Italy, Norway, Spain, and the United Kingdom). In which might also impact on economic aspects (Gray, Kouhy, & Lavers,
particular, there is consensus regarding women's greater orientation 1995). ESG information has become extremely important in recent
towards environmental issues (Agarwal, 2010; Kaijser & Kronsell, years, and firms have been pressured to disseminate more useful
2014; Perkins, 2007), and recent research has mobilized these ideas information about ESG activities. ESG reporting practices indicate an
to investigate the influence of female directors on social and environ- effective corporate commitment to environmental responsibility and
mental strategies (Glass, Cook, & Ingersoll, 2016; Horbach & Jacob, are a significant mechanism to safeguard stakeholders' interests
2018; Li et al., 2017). Analyzing the effect of gender diversity in the (Helfaya & Moussa, 2017). In this sense, the disclosure of information
AC on specific attributes of ESG disclosures remains unexplored, yet on ESG issues has become crucial for stakeholders in their decisions
may prove to be a major issue for companies and regulators with (Arayssi et al., 2016; Eccles, Serafeim, & Krzus, 2011). In addition,
regard to setting up appropriate corporate governance mechanisms revealing voluntary information reduces agency costs associated with
aimed at improving ESG reporting practices. Furthermore, as an moral hazard problems and information asymmetry between the firm
additional objective, this paper provides a more in‐depth analysis of and external stakeholders (Poshakwale & Courtis, 2005; Yu et al.,
the role played by women in the AC by examining whether the 2018). Recent reports highlight that there is a disconnection about
busyness of this committee and the intensity of its activity may what firms disclose on ESG issues and what investors want to know
moderate the effect of gender diversity on ESG disclosure practices. (Pricewaterhouse Coopers, 2016), and investors and information
Our sample is composed of Spanish listed firms in the Madrid intermediaries are increasingly demanding this information to inte-
Stock Exchange for the period 2012–2015. This sample provides a grate ESG data into their valuation models (Ioannou & Serafeim,
particularly interesting scenario because Spain is one of the pioneer 2015). Therefore, disclosure of ESG information minimizes these
countries in implementing laws aimed at encouraging the presence asymmetries and reduces uncertainty, thereby helping to improve
of women on boards of directors. In addition, the quality of voluntary access to finance and firm valuation (Cheng et al., 2014; Ioannou &
ESG disclosures of Spanish listed firms is measured by a specialized Serafeim, 2017).
agency (Deva Comunicación Financiera y Sostenibilidad [DEVA]), which However, the evidence concerning the determinants of ESG
develops a multidimensional index based on the information disclosed reporting has been questioned in several cases due to the lack of a
in the annual report, the sustainability report, and the integrated framework for assessing such disclosures (Zheng, Balsara, & Huang,
report. This rating considers different attributes in order to reflect 2014), which remain mainly nonstandardized. The problem of quality
the quality of voluntary ESG reporting: comprehensiveness, relevance, in ESG reporting has proven to be a complex issue in the literature
and accessibility. Therefore, this offers a unique framework to assess (De La Cuesta & Valor, 2013). Despite the complexity involved in mea-
ESG disclosures. suring the quality of ESG reporting, the comprehensiveness, relevance,
Our results point to a positive association between gender and accessibility of this information are considered crucial attributes.
diversity in the AC and the quality of voluntary ESG disclosures, First, the quality of ESG reporting can only be guaranteed if most of
which result in greater comprehensiveness and relevance. Our find- the information related to ESG aspects concerning a firm is disclosed
ings contribute to CSR and environmental management literature by (Adams & Whelan, 2009). The comprehensiveness of ESG is crucial
highlighting that the presence of women in the AC leads to more to stakeholders (Jain, Keneley, & Thomson, 2015) and is also an indica-
comprehensive and useful ESG information being disclosed for tor of information depth, which can contribute to enhancing compara-
stakeholders. This heralds a step forward in the literature because it bility (De La Cuesta & Valor, 2013). Second, the focus of ESG
provides an understanding of how gender diversity in the AC influ- information for satisfying the information demands of financial
ences specific attributes of ESG disclosures. We also contribute to analysts, investors, and stakeholders in general should also fall on
corporate governance literature by extending the debate concerning the relevance of these disclosures (Manetti & Becatti, 2009). Broadly
whether the presence of women on boards and their committees speaking, companies must focus on disclosing information that is vital
has an effect on social and environmental strategies. In addition, for stakeholders in their decision‐making process and must report
our findings also report that the busyness of the AC, measured relevant information concerning the impact of their operations
through the number of directorships held by its members, negatively (European Commission, 2017). In addition, accessibility is important
BRAVO AND REGUERA‐ALVARADO 3

because communication objectives cannot be achieved without it reporting practices. In this line, the literature also suggests that female
(Davey & Homkajohn, 2004). Firms must also therefore be aware of directors are also more likely to accept roles that are related to
the need to improve the accessibility of their ESG disclosures overseeing environmental and sustainable development matters
(Adelopo, Cea Moure, Vargas Preciado, & Obalola, 2012). (Liao et al., 2015).
Nonetheless, despite the growing number of debates regarding In addition to the agency functions, consistent with stakeholder
ESG issues and their significance in capital markets, the role played theory (Hill & Jones, 1992), ACs should increase a company's sustain-
by directors, and in particular ACs, in ESG reporting practices, remains able behavior and its accountability to its stakeholders. In this sense,
an open question in the literature (Amran et al., 2014; Jizi, 2017). This stakeholders increasingly expect companies to be transparent about
is a current topic of debate because both professionals and academics their ESG issues, and ACs are expected to take responsibility for
have recently emphasized that the AC needs to take responsibility ESG disclosures. Under this view, the potential effect of female AC
for nonfinancial information and to pay particular attention to members on ESG reporting practices may be explained by several rea-
CSR‐related disclosures (Al‐Shaer & Zaman, 2018; EY, 2014; FERMA, sons. First, women represent the concerns of the various stakeholders
2014; KPMG, 2014; Salehi & Shirazi, 2016). This paper fills the gap in better (Bear et al., 2010). The presence of women in the AC is an
the literature by analyzing the effect of gender diversity in ACs on opportunity to draw talent from a larger pool of population who are
ESG disclosures. likely to be more stakeholder‐oriented and maintain strong ties with
Previous literature widely concurs that women display a greater key stakeholders (Arayssi et al., 2016). In particular, the literature
orientation towards sustainability initiatives and are likely to agrees that female directors are more stakeholder‐oriented and more
contribute towards a greater awareness of the need to develop social sensitive to CSR issues, which in turn may improve stakeholder
disclosure strategies (Agarwal, 2010; Horbach & Jacob, 2018; Hossain, engagement and promote ESG disclosures (Giannarakis, 2014b;
Farooque, Momin, & Almotairy, 2017). In this line, researchers have Helfaya & Moussa, 2017). Women also tend to be more participative
recently examined the association between female directors and and democratic than men (Eagly, Johannesen‐Schmidt, & Van Engen,
CSR‐related disclosures by using a number of theoretical frameworks. 2003), which would probably encourage even greater levels of debate
Specifically, agency theory and stakeholder theory have been widely regarding a firm's stakeholders and the attention paid to ESG issues
used to explain the above relationship (Arayssi et al., 2016; Bear, (Galbreath, 2018). Both increased sensitivity and participative
Rahman, & Post, 2010; Galbreath, 2018; Helfaya & Moussa, 2017; decision‐making styles commonly account for the fact that female
Husted & De Sousa‐Filho, 2018; Liao, Luo, & Tang, 2015; Rao & Tilt, directors are more proactive towards social and environmental
2016). Consistent with these theoretical approaches, in this paper, disclosures in an effort to satisfy stakeholders' information needs
we posit that female AC members, in particular, may improve ESG (Rao & Tilt, 2016).
disclosure practices. In line with the previous arguments, the following hypothesis is
Specifically, from an agency perspective, ACs are an important formulated:
control system for internal monitoring and shareholder protection
H1. There is a positive association between gender
(Fama & Jensen, 1983). As regards gender diversity, an AC containing
diversity in the AC and the quality of voluntary ESG
women may lead to closer monitoring and greater reporting discipline
disclosures.
(Adams & Ferreira, 2009; Srinidhi, Gul, & Tsui, 2011). In particular,
women are likely to better oversee ESG reporting practices for several Female directors may, however, prove to be more effective at
reasons. On the one hand, female directors bring specific beliefs and improving ESG disclosures depending on the context in which they
values, drawing higher levels of attention to social and environmental work. Given that establishing adequate ESG disclosure policies
issues, and in AC meetings, women are expected to supervise ESG requires a high degree of dedication, coordination, and commitment,
disclosures better (Galbreath, 2018; Husted & De Sousa‐Filho, 2018). we examine how the activity of the AC may moderate the role of
The literature also highlights that female directors stimulate more women in ESG disclosure process. In particular, we focus on the
participative communication among board members, thus increasing busyness of the AC (average number of AC member directorships)
the AC's ability to discuss and monitor ESG issues (Bear et al., 2010). and the intensity of its activity (number of meetings). Both features
Moreover, female directors are generally better prepared for meetings can determine women's ability to influence the AC's tasks and are
(Huse & Solberg, 2006) because they diligently scan for and collect explained below.
information related to social and environmental issues and are there- The number of directorships has been the subject of debate in
fore more ready to emphasize the benefits of ESG disclosures economic research (Hamdan, 2018), and two opposing views have
(Galbreath, 2018). In addition, female directors are more qualified commonly been used in the literature to explain the consequences
and have greater relevant experience (Field, Souther, & Yore, 2016), of director interlocking. In particular, the number of AC member
and previous research has documented that higher qualifications directorships may influence ESG disclosures for several reasons.
enable CSR issues to be monitored better, which can help the AC to On the one hand, interlocking AC members are able to obtain
integrate ESG information into voluntary disclosure practices greater access to information in more than one company, thus increas-
(Giannarakis, 2014b). Women also approach their responsibilities as ing AC involvement in CSR issues and stimulating potential adoption
directors with greater commitment and involvement (Fondas & of CSR practices (Jain et al., 2015; Razek, 2014). Moreover, AC
Sassalos, 2000; Huse & Solberg, 2006), which may lead to female members who exercise their functions on the boards of different
AC members fulfilling their duties better, such as monitoring ESG firms may also be in a better position to update firms' environmental
4 BRAVO AND REGUERA‐ALVARADO

information and knowledge because their simultaneous access to ACs to have a greater effect on ESG reporting practices if the number
different networks provides experience in different contexts (Ortiz‐ of committee meetings is high. We thus posit the next hypothesis:
de‐Mandojana & Aragon‐Correa, 2015). These AC members may also
H3. The link between gender diversity in the AC and the
promote voluntary ESG disclosures because they have a greater
quality of ESG disclosures is positively influenced by the
capacity to manage the development of stakeholder information
committee's activity.
needs (Lenox & King, 2004). Specifically, these directors may better
implement ESG reporting practices because they gain experience
of managing environmental issues in different situations and can
3 | D A T A A N D M E T H O D O LO G Y
manage information concerning environmental standards, practices,
regulations, and societal expectations better (Ortiz‐de‐Mandojana &
Aragon‐Correa, 2015).
3.1 | Sample and data
On the other hand, AC members holding multiple board appoint-
Our final sample is composed of firms listed on the Madrid Stock
ments may be incapable of effectively monitoring all the firms they
Exchange for the period 2012–2015. Spain is a particularly relevant
represent, thus supporting the busyness hypothesis (Fich &
setting to examine the role of female AC members because it is one
Shivdasani, 2006). Holding multiple directorships diminishes directors'
of the pioneer countries in promoting the presence of women on
dedication because AC members become overcommitted and lack
boards. In addition, the quality of voluntary ESG disclosures is
the time to perform their tasks properly (Fernández‐Méndez,
measured by a specialized agency, DEVA,1 which provides specific
Arrondo‐García, & Pathan, 2017). This might also reduce AC member
measures for the comprehensiveness, relevance, and accessibility of
coordination, because busy directors, namely, those holding multiple
this information. Information about directors was manually collected
appointments, tend to be absent from meetings (Jiraporn, Davidson,
by examining the biography of the 1,353 AC members from the
DaDalt, & Ning, 2009). Specifically, overseeing CSR reporting prac-
selected firms for the period between 2012 and 2015. These
tices requires a great deal of attention (Giannarakis, 2014b), and AC
biographies were obtained from the firms' annual reports or corporate
members are expected to be highly involved if they are to effectively
governance reports and, where necessary, by examining other public
address ESG issues (Galbreath, 2018). Consequently, we assume that
sources such as Bloomberg Business Week. Finally, financial data
at higher levels of busyness, the role of female directors in the AC will
were extracted from Datastream. The final sample comprises 375
be less effective. We therefore formulate the following hypothesis:
observations.
H2. The link between gender diversity in the AC and the
quality of ESG disclosures is negatively influenced by the
3.2 | Variables and empirical model
committee's busyness.

The intensity of a board or committee's activity is a value‐relevant The dependent variable is based on the information provided by the
attribute when seeking to improve their effectiveness. Previous Informe Reporta, published by DEVA. This agency produces several
research has generally used the number of meetings as a measure of rankings to measure the quality of voluntary ESG disclosures of firms
the activity and/or diligence of a board or committee, under the listed in the Madrid Stock Exchange General Index. These rankings
assumption that more activity contributes to better monitoring man- provide quantitative scores for every listed firm regarding specific
agers' ability to take decisions (Brick & Chidambaran, 2010). In theory, information attributes linked to the quality of voluntary ESG reporting:
a large number of AC meetings is likely to improve reporting practices its comprehensiveness, relevance, and accessibility. In this paper, we
by leading to greater control over disclosure process (Al‐Mudhaki & consider three measures for voluntary ESG disclosures, taking into
Joshi, 2004). Little attention has been devoted to the relationship consideration each of these rankings. First, the comprehensiveness
between AC meetings and CSR reporting practices, yet the existing score (COMPR) measures the completeness of ESG information.
empirical evidence confirms that AC members who attend frequent Second, the relevance score (RELEV) considers the disclosure of the
meetings are more likely to enhance the quality of nonfinancial environmental and social impact of a firm's activity in order to improve
reporting and particularly voluntary CSR disclosures (Allegrini & Greco, the decision‐making of financial analysts, investors, and stakeholders
2013; Frías‐Aceituno, Rodriguez‐Ariza, & Garcia‐Sanchez, 2013; Li, in general. Third, the accessibility score (ACCESSIB) measures whether
Mangena, & Pike, 2012; Naseem, Rehman, Ikram, & Malik, 2017). This access to a firm's ESG disclosures is clear and easy for stakeholders.
association can be explained because ACs that hold large numbers of Construction of these scores focuses on the extent to which several
meetings are likely to allocate more time to analyzing and addressing indicators are fulfilled, selected by using criteria based on a number
stakeholders' information needs and to overseeing voluntary disclo- of principles and topics relevant to all of a firm's different stakeholders
sure practices (Naseem et al., 2017). Specifically, frequent AC meet- and which have been considered in the recommendations for good
ings can improve the discussion of ESG issues, thus enabling ESG reporting practices issued by the Global Reporting Initiative, AA1000
information to be included in corporate disclosure policies Accountability Principles, the Dow Jones Sustainability Index,
(Giannarakis, 2014b). In addition, the number of meetings may also FTSE4Good, and the International Integrated Reporting Council. For
improve director commitment (Yin, Gao, Li, & Lv, 2012) and therefore example, the comprehensiveness score relies on the disclosure of a
the promotion of ESG disclosures practices in order to better fulfill
1
their tasks. Consistent with these arguments, we expect women in For more detail, visit the www.informereporta.com website.
BRAVO AND REGUERA‐ALVARADO 5

number of information items, such as environmental policy, corporate TABLE 1 Description of variables
social strategy, integration of sustainability issues into business Variables Definition
operations, corporate governance structures, and code of business
COMPR Measure of the comprehensiveness of voluntary
conduct and ethics. The relevance score focuses on indicators related ESG disclosures
to the identification of stakeholders' information needs, the inclusion RELEV Measure of the relevance of voluntary ESG
of relevant ESG issues for stakeholders, the extent of ESG information disclosures

on these relevant issues, among others. Finally, the criteria employed ACCESSIB Measure of the accessibility of voluntary ESG
disclosures
to calculate the accessibility score consider the availability of informa-
BLAU Blau index of gender diversity in the AC
tion, web accessibility, and usability. Each indicator is individually
PWOMEN Proportion of women in the AC
examined and valued by a group of independent analysts in addition
BUSY Average number of directorships of AC members
to being supervised by experts in the reporting field. in a year
In line with previous studies (Garcia‐Martinez, Zouaghi, & Garcia MEETINGS Number of AC meetings by year
Marco, 2017; Gordini & Rancati, 2017), the main explanatory variable, ACSIZE Number of directors in the AC
gender diversity in the AC, is measured by means of a Blau index INDEPENDENCE Percentage of independent directors within the AC
(BLAU). As a sensibility test, we use the percentage of women in the TENURE Average tenure (number of years) of AC members
AC (PGENDER) as an alternative measure for gender diversity LEVERAGE Ratio of total debt to total assets
(Rodrigues, Tejedo‐Romero, & Craig, 2017). SIZE Logarithm of total assets (thousands of euros)
The two moderating variables, busyness and frequency of AC ROA Return on assets (EBIT divided by total assets)
meetings, have been considered in the model (Al‐Shaer & Zaman, Sector dummies Dummy variables (two‐digit SIC codes)
2016; Rao & Tilt, 2016). AC busyness (BUSY) refers to the average
Note. AC: audit committee; ESG: environmental, social, and governance.
number of boards on which AC members served in a given year. The
intensity of the AC's activity (MEETINGS) is measured by yearly AC ESG DISCLOSURESi;t ¼ β0 þ β1 BLAUi;t þ β2 BUSYi;t
meeting frequency. þ β3 MEETINGSi;t þ β4 ACSIZEi;t
In addition, various AC‐related variables are included as control þ β5 INDEPi;t þ β6 TENUREi;t
variables (Ahmed Haji, Ahmed Haji, Anifowose, & Anifowose, 2016; þ β7 LEVERAGEi;t þ β8 SIZEi;t þ β9 ROAi;t

Li et al., 2012): size, independence, and tenure. AC size (ACSIZE) þ ∑6J¼1 β10 Sector dummiesjt þ μi þ εit ; (1)
refers to the total number of members on the committee. AC inde-
pendence (INDEP) is calculated by the proportion of independent
where β0 is the intercept, and βi is the coefficient of each indepen-
directors within a committee. AC tenure (TENURE) is computed as
dent variable. i identifies the individual and t the year; μi represents
the average number of years that AC members spent on a particular
the fixed individual effect and εit the stochastic error. The stochastic
committee. Based on meta‐analyses of disclosure studies (Chavent, error term combines both the measurement error of any independent
Ding, Fu, Stolowy, & Wang, 2006), we also control for several
variable and the omission of explanatory variables.
variables felt to be related to voluntary ESG disclosure practices:
firm leverage, firm size, profitability, and industry. Firm leverage
(LEVERAGE) is measured with the ratio of total debt to total assets. 4 | E M P I R I C A L R ES U L T S
Furthermore, the size of the firm (SIZE) is calculated as the logarithm
of total assets. In addition, firm profitability (ROA) is calculated as 4.1 | Descriptive statistics
the return on total asset ratio. Finally, dummy variables (two‐digit
SIC codes) are also included to control for the industry effect Table 2 provides the main descriptive statistics for our variables. As
(Sector dummies). regards the measures for ESG disclosures, it can be seen that all the
Table 1 provides a summary of the variables and their definitions. variables present a significant range of values. Although the sample
Our database combines time‐series and cross‐sectional data to is composed of large listed firms, their ESG reporting practices differ
form panel data. Thus, to test the hypotheses formulated, we employ with regard to their comprehensiveness, relevance, and accessibility.
a panel data estimation model for the regression analysis where the Women are clearly underrepresented, because female directors only
different measures for the quality of voluntary ESG disclosures are average 13.5% of total AC membership. Although not reflected in this
regressed on independent and control variables. A panel data table, the percentage of women in the AC did, however, increase over
approach allows us to effectively control for possible unobserved the time horizon from 11.4% in 2012 to 15.24% in 2015. The average
heterogeneity (i.e., the existence of time‐invariant explanatory number of AC member directorships exceeds 2.3. The AC meets
variables that are not observed but correlated with the observed around seven times a year and is composed of nearly four members
explanatory variables). Therefore, within‐firm changes are used to on average, the vast majority of whom are independent directors.
explain variations in the dependent variable (Coles, Naveen, & The correlation coefficients are reported in Table 3. In particular,
Naveen, 2008). We use the Hausman test to determine whether a results show a positive association between all the information attri-
fixed effects or random effects estimation model is the most suitable. butes related to the quality of ESG disclosures and the presence of
The general model used to test our hypothesis is presented in women in the AC. Furthermore, several control variables also seem
Equation (1): to be positively correlated with the information measures.
6 BRAVO AND REGUERA‐ALVARADO

TABLE 2 Descriptive statistics of the main variables

0.148***

−0.484***
0.114**

0.124**
0.098*

−0.087*
−0.040
−0.038
0.070

−0.043
0.026

0.046
Variables Mean SD Q1 Median Q3

1.37
(13)
COMPR 13.877 9.489 4.050 13.800 22.400
RELEV 12.352 8.579 4.400 12.500 19.800

0.595***
0.592***
0.556***
0.170***

0.490***

0.222***
0.165**
0.153**

−0.143**
ACCESSIB 8.037 4.117 5.000 8.500 11.300

0.021
−0.004

1.49
BLAU 0.167 0.207 0.000 0.000 0.375

(12)
PGENDER 0.135 0.181 0.000 0.000 0.250
BUSY 2.339 0.985 1.667 2.250 3.000

0.124***

0.136***

0.238***
0.115**

0.131**

−0.115**
MEETINGS 6.976 2.972 5.000 6.000 9.000

0.066

−0.024

0.018
−0.073

1.46
ACSIZE 3.602 0.954 3.000 3.000 4.000

(11)
INDEPENDENCE 0.947 0.141 1.000 1.000 1.000
TENURE 6.971 4.203 4.000 6.333 9.268

−0.193***
−0.200***

−0.168**
LEVERAGE 0.684 0.295 0.496 0.702 0.896

0.095*
−0.005
−0.043
−0.023

0.027
−0.025

1.10
SIZE 14.688 2.482 12.711 14.556 16.381

(10)
ROA 2.792 7.900 0.540 3.150 6.541

Note. The description of all the variables is presented in Table 1. Standard

0.170***
0.086*
errors in parentheses.

0.048
0.068

0.037
0.019
−0.014
−0.054

1.04
***p < 0.01, **p < 0.05, *p < 0.1.

(9)
4.2 | Main analysis

0.025
0.053
0.017

−0.012
0.045
−0.027
0–003

1.04
The results of the multivariate analysis are presented in Table 4. (8)
Columns 1–3 report the association between each dependent variable
and gender diversity in the AC. Results show a positive and statisti-
0.331***
0.320***
0.241***
−0.037
0.003
0.079
cally significant association between the presence of female directors

1.41
(7)

in the AC (BLAU) and the comprehensiveness (COMPR) and relevance

(RELEV) of ESG disclosures (p‐value <0.001). Moreover, results fail to
find an association between female AC members (BLAU) and the
0.233***
0.208***
0.225***

−0.115**
−0.083

accessibility (ACCESSIB) of voluntary ESG information. As regards

1.07
(6)

the control variables, the average number of AC member directorships

(BUSY), AC member tenure (TENURE), and the number of AC meet-

Note. The description of all the variables is presented in Table 1. Standard errors in parentheses.
0.223***
0.217***
0.138***
0.949***

ings (MEETINGS) are positively related to the comprehensiveness

(COMPR) and relevance (RELEV) of ESG disclosures. In addition, a

1.11
(5)

positive association between firm size (SIZE) and profitability (ROA)

and most of the variables for ESG disclosures can also be observed.
0.224***
0.231***
0.151***

As a sensitivity analysis, all the regressions were re‐run, including

1.12
a different variable (PWOMEN) for our main explanatory variable,
(4)

which refers to the proportion of women in the AC. For brevity,

results are unreported, yet confirm the role played by women in the
0.817***
0.779***
Correlation matrix and variance inflation factors

AC vis‐à‐vis establishing better voluntary ESG reporting practices

(3)

and lead us to support H1.

One possible problem when analyzing linkages between the qual-
0.932***

ity of voluntary disclosures and corporate governance is the issue of

endogeneity between the dependent and independent variables, and
(2)

one problem associated with endogeneity is reverse causality (Adams

& Ferreira, 2009). In other words, boards of socially responsible
(1)

companies can be more attractive and may more easily recruit more
***p < 0.01, **p < 0.05, *p < 0.1.

women than boards of nonsocially responsible companies (Webb,

INDEPENDENCE

2004). In this sense, women might not randomly join company boards
MEETINGS

LEVERAGE

of directors but choose those with better disclosure practices, because

PGENDER
ACCESSIB
Variables

TENURE
COMPR

ACSIZE

this can enhance their reputations and avoid them taking on an addi-
RELEV

BLAU

BUSY

ROA
SIZE

VIF

tional workload (Abernathy, Herrmann, Kang, & Krishnan, 2013;

Dou, Sahgal, & Zhang, 2015). Therefore, reverse causality endogeneity
TABLE 3

implies that, beyond the potential effect of female AC members on

(10)
(11)
(12)
(13)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)

ESG disclosures, firms with better ESG reporting practices might also
BRAVO AND REGUERA‐ALVARADO 7

TABLE 4 Regression of ESG disclosures and gender diversity (I)

Variables (1) COMPR (2) RELEV (3) ACCESSIB

BLAU 6.478*** (1.834) 4.847*** (1.677) −0.243 (1.323)
BUSY 1.074** (0.449) 0.713* (0.416) 0.205 (0.384)
MEETINGS 0.275* (0.143) 0.339** (0.134) −0.091 (0.105)
ACSIZE −0.207 (0.239) 0.189 (0.228) −0.313** (0.158)
INDEP 0.585 (1.646) 1.813 (1.565) 0.2716 (1.082)
TENURE 0.226** (0.101) 0.191** (0.092) 0.036 (0.080)
LEVERAGE 0.536 (1.873) −0.524 (1.681) 0.690 (1.655)
SIZE 1.646*** (0.293) 1.247*** (0.264) 1.510** (0.735)
ROA 0.106** (0.044) 0.132*** (0.042) −0.028 (0.032)
Sector dummies Yes Yes Yes
Observations 372 376 376
R2‐adj. 0.516 0.524 0.041
F‐statistic 120.76*** 118.33*** 1.22
FE/RE RE RE FE

Note. ESG: environmental, social, and governance.

The description of all the variables is presented in Table 1. Standard errors in parentheses.
***p < 0.01, **p < 0.05, *p < 0.1.

attract female directors. We use simultaneous equations to address (BUSY) and number of AC meetings (MEETINGS). Models 1–6 report
this endogeneity problem (Carter, D'Souza, Simkins, & Simpson, the potential moderation of these AC characteristics in the link
2010; Cheng et al., 2014). This methodology provides efficient between each measure concerning the disclosure of ESG information
estimates when error terms can be correlated across equations. Thus, and gender diversity. As regards the interaction between gender
estimating the model is like a problem of seemingly unrelated regres- diversity in the AC and its busyness (Model 1, Model 3, and Model
sions with the difference that some explanatory variables may be 5), our evidence shows that directorships (BLAU*BUSY) negatively
endogenous (López & Morrós, 2014). This procedure employs an esti- moderate the relationship between the comprehensiveness (COMPR)
mation via three‐stage least squares. A system of two equations using and relevance (RELEV) of voluntary ESG reporting and the presence
the three‐stage least squares method was therefore estimated. The of women in the AC (BLAU), thus supporting H2. Model 2, Model 4,
first equation is the general model proposed in our study, considering and Model 6 provide the coefficient of the interaction between gen-
each of our ESG disclosure measures as the dependent variable: der diversity and AC meetings (BLAU*MEETINGS). In this case, we fail
COMPR (Model 1), RELEV (Model 3), and ACCESSIB (Model 5); and to find a significant effect of the number of AC meetings
the presence of women in the AC (BLAU) as the independent variable. (BLAU*MEETINGS) on the link between the quality of voluntary ESG
The second equation seeks to explain the determinants of gender disclosures (COMPR, RELEV, and ACCESSIB) and the presence of
diversity by using the variable BLAU as the dependent variable and women in the AC (BLAU). These findings suggest that the effect of
the measures related to voluntary ESG disclosures as independent female AC members on ESG reporting practices remains the same
variables (Model 2, Model 4, and Model 6). In this second equation, regardless of how intense the committee's activity is. Therefore, H3
in addition to the previous control variables, we also incorporated is not supported. Although the frequency of meetings seems to
the logarithm of directors' remunerations (REMUNERATION) as an individually affect ESG disclosures, its influence on the role of gender
explanatory variable of the presence of women in the AC. Although diversity in the AC is negligible.
director remuneration should not differ by sociodemographic attri- To further explain these findings, the results of the interaction
butes, recent research has highlighted that female directors receive analyses for the variable “BUSY” are shown in Figures 1 (“COMPR”)
lower compensation than their male counterparts (Bozhinov, Koch, & and 2 (“RELEV”). The impact of busy ACs on the relationship between
Schank, 2017; Fedaseyeu, Linck, & Wagner, 2018; Field et al., 2016). gender diversity in the AC and the quality of voluntary disclosures can
The results, presented in Table 5, confirm the existence of a link be observed in these figures.
between voluntary ESG disclosure and gender diversity in the AC.
In the next stage of the study, we analyze how two specific
characteristics of the AC (busyness and meetings) influence the
relationship between the quality of voluntary ESG disclosures and 5 | DISCUSSION
the presence of female directors on this committee. Variables were
centered at their within‐firm mean, which control for firms' unob- This study seeks to explore the relationship between gender diversity
served time‐invariant characteristics. Table 6 presents the results from in the AC and the quality of voluntary ESG disclosures by focusing on
the regression analyses, including the interaction of the variable the comprehensiveness, relevance, and accessibility of this informa-
related to gender diversity with both the variables for busyness tion. Our results present a step forward in social and environmental
8 BRAVO AND REGUERA‐ALVARADO

TABLE 5 Results of the estimation with simultaneous equations

COMPR BLAU RELEV BLAU ACCESSIB BLAU

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

BLAU 7.163*** (1.761) 7.013*** (1.561) 1.643** (0.838)

COMPR 0.005*** (0.002)
RELEV 0.005*** (0.002)
ACCESSIB 0.005 (0.003)
BUSY 1.544*** (0.359) −0.028*** (0.011) 1.274*** (0.319) −0.027** (0.011) 0.672*** (0.171) −0.024** (0.011)
MEETINGS 0.444*** (0.142) 0.351*** (0.125) 0.010 (0.067)
ACSIZE 0.057 (0.362) −0.002 (0.011) 0.410 (0.322) −0.002 (0.011) −0.016 (0.173) −0.000 (0.011)
INDEP 3.322 (2.448) 0.014 (0.073) 3.675* (2.181) 0.005 (0.073) 2.668** (1.171) 0.008 (0.074)
TENURE 0.276*** (0.088) −0.011*** (0.003) 0.182** (0.077) −0.010*** (0.002) 0.089** (0.041) −0.010*** (0.003)
LEVERAGE −1.324 (1.556) −2.916** (1.356) −0.128 (0.728)
SIZE 1.806*** (0.185) 0.001 (0.007) 1.533*** (0.165) 0.000 (0.007) 0.757*** (0.088) 0.002 (0.007)
ROA 0.086* (0.051) 0.091** (0.045) 0.024 (0.024)
REMUNERATION 0.020 (0.013) 0.018 (0.013) 0.028** (0.013)
Sector dummies Yes Yes Yes Yes Yes Yes
Observations 372 373 376 377 376 377
R2‐adj. 0.526 0.126 0.539 0.124 0.424 0.105

Note. The description of all the variables is presented in Table 1. Standard errors in parentheses.
***p < 0.01, **p < 0.05, *p < 0.1.

TABLE 6 Regression of ESG disclosures and gender diversity moderated by multiple directorships and AC meetings

COMPR RELEV ACCESSIB

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
BLAU 6.567*** (2.191) 5.240*** (1.773) 3.476* (2.000) 2.436 (2.009) 0.186 (1.359) −0.134 (1.354)
BUSY 0.543 (0.608) 0.559 (0.419) −0.032 (0.570) −0.099 (0.578) 0.307 (0.388) 0.273 (0.390)
BLAU*BUSY −3.468** (1.543) −3.499** (1.439) −1.270 (0.978)
MEETINGS 0.114 (0.169) 0.142 (0.141) 0.261* (0.157) 0.250 (0.159) −0.134 (0.107) −0.138 (0.107)
BLAU*MEETINGS 0.757 (0.514) 0.160 (0.507) −0.039 (0.342)
ACSIZE −0.286 (0.247) −0.143 (0.245) 1.182 (1.195) 0.126 (0.236) −0.328** (0.159) −0.321** (0.159)
INDEP −0.270 (1.700) 0.981 (1.663) 1.182 (1.195) 1.247 (1.613) 0.182 (1.084) 0.249 (1.087)
TENURE 0.195 (0.127) 0.168* (0.095) 0.177 (0.119) 0.156 (0.120) 0.059 (0.081) 0.051 (0.081)
LEVERAGE 0.713 (2.662) −1.927 (1.787) −0.118 (2.499) 0.419 (2.529) 1.596 (1.698) 1.751 (1.704)
SIZE 2.471* (1.282) 2.614*** (0.277) 1.182 (1.195) 0.761 (1.197) 1.182 (1.195) 2.477*** (0.807)
ROA 0.103** (0.051) 0.070 (0.044) 0.137*** (0.047) 0.129*** (0.048) −0.025 (0.032) −0.028 (0.032)
Sector dummies Yes Yes Yes Yes Yes Yes
Observations 356 356 359 359 359 359
R2‐adj. 0.075 0.423 0.077 0.055 0.073 0.067
F‐statistic 2.01** 228.12*** 2.06** 1.44 1.97** 1.79*
FE/RE FE RE FE FE FE FE

Note. AC: audit committee; ESG: environmental, social, and governance.

The description of all the variables is presented in Table 1. Standard errors in parentheses.
***p < 0.01, **p < 0.05, *p < 0.1.

studies and also contribute to the literature concerning business information is one of the challenges in the existing literature
strategy and corporate governance. (Amran et al., 2014). As commented on in the theoretical framework,
First, how ESG reporting may or should be measured is a contro- comprehensiveness, relevance, and accessibility in voluntary reporting
versial issue in the literature (De La Cuesta & Valor, 2013). Previous has become an important subject of debate for academics, profes-
studies have mainly used content analysis techniques (Giles & Murphy, sional bodies, and policymakers alike. Analyzing these information
2016; Lokuwaduge & Heenetigala, 2017) and composite ratings such attributes enhances our understanding of ESG reporting practices.
as ASSET4 or Bloomberg to measure the extent of ESG information Second, despite the increasing attention paid to gender diversity,
(Arayssi et al., 2016; Ioannou & Serafeim, 2017; Jizi, 2017). However, previous literature has failed to provide evidence on the role of female
the search for additional measures of social or environmental AC members in the ESG reporting process. In the corporate sphere,
BRAVO AND REGUERA‐ALVARADO 9

Our evidence also provides a new insight into the literature

because the influence of female AC members on the comprehensive-
ness and relevance of ESG disclosures appears to be negatively
moderated by AC busyness. Some studies have suggested that the
association between gender diversity and corporate strategies might
be moderated by contextual factors, although further inquiry is
needed on this issue (Li et al., 2017). Our results highlight that, regard-
less of the presence of female directors in the AC, committees whose
members are overcommitted display a negative relationship with the
comprehensiveness and relevance of ESG information. The busyness
of the AC is likely to affect the degree of dedication, coordination,
FIGURE 1 Relation between audit committee (AC) gender diversity and commitment of AC members and, as a result, how effective the
and the comprehensiveness of voluntary disclosures at different AC is in the disclosure process. Additional appointments can lead to
levels of busyness of the AC. Confidence intervals: A [8.47, 12.82]; B
inadequate control of a firm's ESG information, thus affecting the
[13.13, 16.41]; C [11.70, 14.56]; D [12.84, 16.02].
quality of ESG disclosures.

6 | CO NC LUSIO NS

This paper provides new empirical evidence concerning the effect of

gender diversity in the AC on the quality of voluntary ESG disclosures.
Unlike previous studies, our analysis focuses on specific information
attributes (comprehensiveness, relevance, and accessibility) to capture
the quality of ESG disclosures. We find that the presence of women in
the AC influences the comprehensiveness and relevance of ESG
information.
Due to ongoing political debates regarding female representation
on boards, listed companies are being forced to think about how to
FIGURE 2 Relation between audit committee (AC) gender diversity
and the relevance of voluntary disclosures at different levels of solve the problem of female underrepresentation on their boards
busyness of the AC. Confidence intervals: A [8.57, 12.62]; B [11.92, and committees. One major concern is whether or not women who
15]; C [10.61, 13.30]; D [10.48, 13.46]. serve on boards and committees contribute economically. Our results
present a strong business case for increasing gender diversity on
some studies have indicated that gender diverse boards are associated board subcommittees because our evidence extends the academic
to better CSR strategies (Bear et al., 2010; Glass et al., 2016; Li et al., debate on the benefits derived from having women serving on the
2017; Zhang, Han, & Yin, 2018). In particular, recent research has AC. Furthermore, given the importance of ESG disclosures in capital
suggested that the presence of women on boards is linked to improve- markets, for firms, policymakers, and stakeholders in general,
ments in the extent of CSR information (Arayssi et al., 2016; Helfaya & understanding the relationships between gender diversity in the AC
Moussa, 2017; Rao & Tilt, 2016). Moreover, several studies have also and the quality of ESG reporting would help regulators and owners
examined the influence of women directors on the assurance of to establish appropriate corporate governance mechanisms.
CSR information (Al‐Shaer & Zaman, 2016; Amran et al., 2014). This Because prior research has highlighted the importance of consid-
branch of literature generally focuses on how women impact on the ering a contextual approach (Li et al., 2017; Zona et al., 2013) in order
board of directors, although recent trends emphasize that ESG to understand the effect of directors on firm outcomes, we also study
information should be a key subject for ACs (Al‐Shaer & Zaman, the moderating influence of the AC's activity (busyness and meetings)
2018; FERMA, 2014). on the role played by female AC members. Our findings extend
We extend the previous literature by showing that gender previous research by showing that the busyness of ACs negatively
diversity in the AC has a positive impact on the comprehensiveness moderates the effect of women in the AC on disclosure practices. This
and relevance of ESG. Our evidence reinforces the role of gender evidence contributes to the debate concerning the need to consider
diversity in the AC, because these information attributes are relevant the context in which women work if their influence is to be under-
for stakeholders, enhancing efficiency in capital markets, and also stood better, which will have direct implications for academics, firms,
prove beneficial for firms by improving the cost of finance and corpo- and regulators.
rate reputation. From a theoretical point of view, women may act as This paper evidences certain limitations that may be considered
monitoring mechanisms in the AC vis‐à‐vis increasing the commitment when undertaking future research. First, although Spain offers a
to provide valuable ESG information. In addition, women may push relevant context for analyzing gender diversity and ESG information
ACs to display greater stakeholder orientation and to place greater attributes, future research might explore different legal and/or
emphasis on comprehensive and relevant ESG reporting practices. institutional contexts, because the effect of directors may vary across
10 BRAVO AND REGUERA‐ALVARADO

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