Economic policy uncertainty and environmental, social and governance (ESG) disclosure: the moderating effects of board network centrality and political connections

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Harjoto, MA and Wang, Y ORCID: https://orcid.org/0000-0001-5438-4255, 2024. Economic policy uncertainty and environmental, social and governance (ESG) disclosure: the moderating effects of board network centrality and political connections. Corporate Governance. ISSN 1472-0701

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Official URL: https://doi.org/10.1108/CG-08-2023-0349

Abstract

Purpose: This study aims to examine the relationship between economic policy uncertainty (EPU) and environmental, social and governance (ESG) disclosure and the moderating role of board network centrality and political connections on the nexus between EPU and ESG.

Design/methodology/approach: Using a sample of the UK Financial Times Stock Exchange (FTSE) 350 firms during 2007 to 2018, this study examines the relationship between EPU and the ESG disclosure and the moderating effects of board centrality and board political connections using multivariate regression analysis.

Findings: The results show that firms tend to increase their ESG disclosure when EPU rises. The results also reveal that EPU is negatively associated with firms' financial performance and ESG performance is less evident for firms with higher ESG disclosure scores and is observed only when board centrality is relatively low and the political connections are absent. The study finds further evidence to support the hypotheses during periods of heightened conflicts (i.e. global financial crisis and the Brexit referendum).

Practical implications: This study offers practical insights for corporate managers who attempt to preserve and enhance their firms' competitive advantages via maintaining its stakeholders support through greater ESG disclosure during heightened EPU periods.

Originality/value: By integrating the resource-based view (RBV) and the signaling theory, this study extends the signaling theory and RBV by examining the relationship between EPU and ESG disclosure as a signal to its stakeholders and information advantages that board centrality and political connections bring to the company to reduce information asymmetry between the firms and its stakeholders during EPU.

Item Type:	Journal article
Publication Title:	Corporate Governance
Creators:	Harjoto, M.A. and Wang, Y.
Publisher:	Emerald
Date:	11 June 2024
ISSN:	1472-0701
Identifiers:	Number Type 10.1108/CG-08-2023-0349 DOI 1902191 Other
Rights:	© 2024, Emerald Publishing Limited. This AAM is provided for your own personal use only. It may not be used for resale, reprinting, systematic distribution, emailing, or for any other commercial purpose without the permission of the publisher.
Divisions:	Schools > Nottingham Business School
Record created by:	Jonathan Gallacher
Date Added:	13 Jun 2024 08:56
Last Modified:	13 Jun 2024 08:56
URI:	https://irep.ntu.ac.uk/id/eprint/51556