Understanding the governance–disclosure nexus: board attributes, ownership structure and carbon emission disclosure in Egypt

Abstract

Purpose The aim of this research is to investigate the influence of board of directors' characteristics (BODC) on carbon emission disclosure (CED) and determine whether the relationship between BODC and CED is moderated by institutional ownership (IO) for Egyptian listed firms. This research particularly explores the effects of board size, independence, gender diversity and nationality diversity on CED. Design/methodology/approach The empirical analysis is based on 51 EGX70-listed non-financial companies between 2019 and 2023, which provides 255 firm-year observations. The data were obtained through the board reports, ESG disclosures and audited financial statements. A system generalized approach of moments (GMM) is used to conquer endogeneity issues and this approach is supplemented by two-stage least squares (2SLS) estimator and hypothesis are then tested. Findings The findings show that board size negatively affects CED, board independence positively affects CED and gender diversity also affects CED in a positive way. Diversity in board nationality is also found to have negative relationships with CED, which can be explained by the unfamiliarity with the culture and regulation. These relationships are also largely moderated by institutional ownership, which reduces the negative influence of board size and enhances the positive effect of board independence. The results indicate the importance of the board composition in promoting transparency of the environment of Egyptian listed firms. Practical implications The study provides valuable insights to market regulators, corporate boards and investors in emerging markets. The study provides insights to market regulators such as the Financial Regulatory Authority (FRA) to improve ESG mandates as suggested by El-Deeb et al. (2023). The study provides insights to corporate boards to improve gender diversity and independence to improve environmental transparency. The study also provides insights to investors to improve market efficiency by leveraging ownership stakes to improve stakeholder interests as suggested by Siew et al. (2016). Originality/value This study investigates the moderating role of institutional ownership in the relationship between board characteristics – size, independence, gender and nationality diversity – and carbon emission disclosure in Egypt. It provides novel evidence from an emerging market shaped by recent ESG reforms and COP27, showing that institutional investors enhance board effectiveness while nationality diversity may hinder transparency, extending legitimacy, stakeholder and resource-based perspectives.