Association Between Corporate Governance And Sustainability Reporting Among FTSE 250 Entities

Appreciation of the need for entities to run their businesses sustainably has led to the demand for sustainability reporting as a means to show how businesses perform on various metrics. Since sustainable practices could lead to long-term success of the entity, there has been interest on whether and how corporate governance systems are associated with sustainability reporting. This dissertation seeks to highlight such an association among the FTSE 250 companies. The aspects of corporate governance considered in the dissertation are board characteristics and ownership structure. Board attributes evaluated are board independence, board gender diversity, CEO-Duality and presence of a CSR committee at the board level. Ownership structure aspects considered are insider and institutional ownership. Firm characteristics, namely size, profitability, and leverage were also included as control variables for the analysis. Correlation and linear regression analyses were done to evaluate bivariate associations between variables and effects of any of the governance and control variables on level of sustainability reporting. Results show that only institutional ownership has a significant effect on sustainability reporting among the FTSE 250 entities, and such significance only arose at the 90% confidence level. For the control variables, only size of the entity is indicated to enhance the level of sustainability reporting, consistent with the suggestion that large entities may face higher pressures to disclose sustainability information because they are perceived to have a higher effect on sustainability issues than do smaller companies. These results indicate that the board characteristics and ownership structure do not influence how FTSE 250 entities disclose their sustainability performance. These findings imply that retail investors should not be concerned that FTSE companies that have significant institutional ownership may fail to disclose sustainability information as predicted in theory. Moreover, the results show that regulators may need to focus on aspects of corporate governance other than board characteristics if they want to influence change in how companies in the LSE report about sustainability