Article2023

Does CSR disclosure mediate the board characteristics-cost of equity capital nexus? Evidence from Jordanian services companies

Malik Muneer Abu Afifa · Isam Hamad Saleh · Nawaf Samah Mohammad Thuneibat · Nha Minh Nguyen

24 citations0/0 files storedJournal of financial reporting & accounting

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Corporate Social Responsibility Reporting Corporate Finance and Governance Corporate Governance and Financial Management

Abstract

Purpose This study aims to investigate the direct nexus between board characteristics, corporate social responsibility (CSR) disclosure and the cost of equity capital (CEQ). This is done by using agency theory, stakeholder theory and signalling theory, followed by an investigation into the indirect mediation impact of CSR disclosure in the board characteristics-CEQ nexus. It intends to present new experimental evidence from Jordan’s developing economy. Design/methodology/approach The study’s target population was services companies registered on the Amman Stock Exchange (ASE) between 2012 and 2020. As a result, the population and sampling of this study are represented by all services companies for whom complete data are available over the period, with a total of 43 services companies yielding 387 company-year observations. Data for our study were obtained from their annual disclosures and the ASE’s database. Findings The main findings demonstrated that board size, board gender variety and the number of board sessions positively affect CSR disclosure significantly. In addition, three board characteristics (i.e. board size, board independence and board gender variety) significantly negatively affect CEQ. Besides, CSR disclosure significantly negatively affects CEQ and it fully mediates the relationship between two board characteristics (i.e. board size and board gender variety) and CEQ, whereas it partially mediates the nexus between board independence, CEO/Chairman duality and the number of board sessions of board characteristics and CEQ. Originality/value This study varies from earlier studies, in that it builds a new research model by looking at the mediating role of CSR disclosure in the nexus among board characteristics and the CEQ.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1998Initial conditions and moment restrictions in dynamic panel data models 1973Job Market Signaling 2010Signaling Theory: A Review and Assessment 1983Agency Problems and Residual Claims 2010Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting 2010The Business Case for Corporate Social Responsibility: A Review of Concepts, Research and Practice

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