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1. Introduction
This study is based on two fundamental observations. First, board gender diversity has been long relegated to an ethical issue that it is wrong to exclude individuals on the ground of their gender regardless of their ability (Brammer et al., 2007). However, women on corporate boards (WOCB) are increasingly perceived as a key value driver for organizations and the idea of a “business case for diversity” was developed by Robinson and Dechant (1997). Second, stakeholders (especially shareholders and stock markets) were calling for more corporate transparency regarding environmental, social and governance (ESG) disclosure (Eccles et al., 2011). Consequently, European Commission (2001) expressed a business case for corporate social responsibility (CSR), “whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (p. 6). This vision creates new responsibilities for boards, and directors individually, both in terms of corporate activities and accountability, which raises the question of a possible link between board gender diversity and a firm’s ESG disclosure.
The literature has investigated different facets of the ESG disclosure issue. For instance, Cho and Patten (2007) examined the determinants of social and environmental strategy and disclosure. They show that environmental disclosure is used as a corporate tool for legitimacy. The literature (e.g. Patten, 2002) has also examined the relationship between environmental performance and environmental disclosure. In general, these studies fail to find any significant relationship. Finally, other studies (e.g. Michelon and Parbonetti, 2012) have examined the effect of corporate governance mechanisms on sustainability disclosure. These studies show that corporate governance plays a role in the sustainability disclosure of US and European companies. The literature on WOCB has mainly focused on tracing the representation of WOCB or examining the underrepresentation of female directors at the micro, meso and macro levels (Terjesen et al., 2009).
According to Galbreath (2013), the literature on ESG studies is limited, as a large part of the research attempts to prove relationships between ESG and firm financial performance.
While this approach is legitimate, focusing on the relationship between ESG and firm financial performance fails to consider the role of corporate governance mechanisms in disseminating ESG disclosure and neglects, in turn, its effect on firm financial performance.
Therefore,...