Board characteristics and the choice between sustainability and integrated reporting: A European analysis

Purpose: This study examines if and to what extent corporate governance characteristics could influence the choice of companies to voluntary publish a sustainability report, an integrated report or both of them. Design/methodology/approach: Through a multinomial regression analysis, this study tests our arguments in a sample of 2,119 European listed firms that adopt integrated or sustainability reporting or both of them for the period 2015-2018. Findings: Our results find that sustainability reporting is associated with board size, board independence, board diversity gender, a two-tier board structure, CEO duality and the presence of a CSR committee. The adoption of integrated reporting is influenced by board size, board diversity gender, board meeting frequency, a two-tier board structure, CEO duality, the presence of an audit, compensation and nomination committees composed by a majority of independent directors, and of a CSR committee. Finally, those companies that adopt both a sustainability and an integrated report are associated with board size, board diversity gender, board meeting frequency and the presence of a CSR committee. Hence, it is possible to note that although these reporting devices share some commonalities, integrated reporting results to be much more articulated, thus requiring more competencies, discussion and alignment between management and shareholders’ interests. Research implications/limitations: This study contributes to the literature in two ways. Firstly, it proposes an incremental analysis of the relationship between corporate governance characteristics and voluntary disclosure of integrated reporting. Secondly, the above is examined in a comparative way to the adoption of sustainability reporting Practitioner implications: This study provides useful insights for managers and policy makers to better understand which is the board composition that can best encourage a company to pursue a strategy based on sustainable development. Originality/value: This study offers a unique perspective on the interconnection between corporate governance and non-financial reporting. It is the first study analysing the adoption of integrated and sustainability reports, through the eyes of board composition, in a comparative manner