Does board gender diversity improve environmental, social and governance disclosure? Evidence from South Africa

Abstract

Purpose: This study examines the relationship between board gender diversity and environmental, social and governance (ESG) disclosure of companies listed on the Johannesburg Stock Exchange (JSE).

Design/methodology/approach: Panel regressions were used to analyse an unbalanced sample of 92 companies (725 company years) listed on the JSE All Share Index during 2011 to 2021. Board gender diversity, measured as the percentage of women on a board, was regressed against aggregate and individual component Bloomberg ESG disclosure scores. ‘Critical mass theory’ was tested using a 30%+ female board representation dummy variable.

Findings/results: Positive correlation is found between female board representation and both aggregate ESG and S-disclosure. This likely results from unexplained differences between company and overall economy level time effects, as no time series correlation remains between board gender diversity and ESG disclosure scores once these effects are controlled for. Little evidence is found in support of critical mass theory.

Practical implications: The results, although not conclusive, provide support for the argument that greater female representation on South African corporate boards is desirable to attain higher ESG disclosure. However, both female board representation and ESG disclosure scores may be driven by the same non-modelled underlying process, likely controlled for by the fixed effects.

Originality/value: This study adds to the growing ESG and board gender diversity research – specifically in South Africa, an interesting case of an emerging economy with well-developed governance and disclosure frameworks, where more equitable gender board representation and increasing ESG disclosure are topics of great practical and academic importance.