Relationship between environmental, social and governance disclosure and board of directors and information asymmetry in latin american companies
DOI:
https://doi.org/10.4025/enfoque.v45i2.73004Keywords:
ESG Disclosure; Administrative Council; Corporate governance; Information Asymmetry; Latin America.Abstract
Objective: to analyze the relationship between environmental, social and governance (ESG) disclosure and the board of directors in the information asymmetry of companies in Latin America.
Method: companies from five Latin American countries (Argentina, Brazil, Chile, Mexico and Peru) were analyzed between 2016 and 2022. Data analysis was performed, for a total of 222 companies, based on OLS (Ordinary Least Squares) regression with robust standard errors (with White correction).
Originality/Relevance: it was found that together the constructs: ESG disclosure, corporate governance and information asymmetry have not yet been explored in the Latin American countries analyzed, configuring a theoretical gap identified in the literature.
Results: The results showed that ESG disclosure and its components, as well as the characteristics of the board of directors (BOD) (size and independence of the BOD) contribute to minimizing the information asymmetry of companies in the Latin American countries analyzed. These results indicate that greater ESG disclosures, as well as a smaller and independent CA reduce information opacity and agency conflicts. Furthermore, these results demonstrate that ESG disclosure and board alignment fulfill the role of reducing information asymmetry.
Contributions: The findings of this research help companies, managers and CAs to understand the peculiarities of having a leaner CA with independent members, which monitors and communicates effectively, in addition to the importance of ESG disclosures, demonstrating greater business transparency, thereby meeting the interests of investors and other interested parties. It is expected that the results will contribute to business management, reducing information asymmetry, encouraging sustainable investments and promoting the continuity of Latin American companies through the composition of an efficient CA.
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References
Abad, D., Lucas-Pérez, M. E., Minguez-Vera, A., & Yagüe, J. (2017). Does gender diversity on corporate boards reduce information asymmetry in equity markets?. Business Research Quarterly, 20(3), 192-205.
Acuna-Duarte, A. A., Arévalo-Alegría, M., & King-Domínguez, A. (2020). Composición del consejo de administración y desempeno financiero en mercados emergentes de América Latina: evidencia para Brasil, Chile y México. Estudios Gerenciales, 36(156), 272-287.
Akmal, M., Rashid, A., & Amin, S. (2022). Corporate governance and information asym-metry. Forman Journal of Economic Studies, 18(2), 45-69.
Alduais, F., Almasria, N. A., & Airout, R. (2022). The Moderating Effect of Corporate Gov-ernance on Corporate Social Responsibility and Information Asymmetry: An Empirical Study of Chinese Listed Companies. Economies, 10(280), 1-23.
Almulhim, A. A. (2023). Effects of board characteristics on information asymmetry: Evi-dence from the alternative investment market. Heliyon, 9, 1-16.
Benkraiem, R., Hamrouni, A., Lakhal, F., & Toumi, N. (2017). Board independence, gender diversity and CEO compensation. Journal of Business in Society, 17(5), 845-860.
Bae, S. M., Masud, M. A. K., & Kim, J. D. (2018). A cross-country investigation of corporate governance and corporate sustainability disclosure. Sustainability, 10(8), 1-16.
Cherkasova, V., & Nenuzhenko, I. (2022). Investment in ESG Projects and Corporate Per-formance of Multinational Companies. Journal of Economic Integration, 37(1), 54-92.
Chouaibi, S., Chouaibi, J., & Rossi, M. (2022). ESG and corporate financial performance: the mediating role of green innovation: UK common law versus Germany civil law. EuroMed Journal of Business, 17(1), 46-71.
Cui, J., Jo, H., & Na, H. (2018). Does corporate social responsibility affect information asymmetry?. Journal of Business Ethics, 148, 549-572.
Dandaro, F. M., & Lima, F. G. (2022). ESG Performance and Credit Risk in Latin Ameri-ca. Sociedade, Contabilidade e Gestão, 17(3), 40-56.
Diebecker, J., & Sommer, F. (2017). The impact of corporate sustainability performance on information asymmetry: the role of institutional differences. Review of Managerial Sci-ence, 11(2), 471-517.
Duque-Grisales, E., & Aguilera-Caracuel, J. (2021). Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal Business Ethics, 168(2), 315-334.
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law and Economics, 26(2), 327-349.
Fernandes, S. M., Bornia, A. C., & Nakamura, L. R. (2018). The influence of boards of direc-tors on environmental disclosure. Management Decision, 57(9), 2358-2382.
Goh, B. W., Lee, J., Ng, J., & Ow, Y. K. (2016). The effect of board independence on infor-mation asymmetry. European Accounting Review, 25(1), 155-182.
Gul, F. A., Hutchinson, M., & Lai, K. M. Y. (2013). Gender-diverse boards and properties of analyst earnings forecasts. Accounting Horizons, 27(3), 511-538.
Hamrouni, A., Bouattour, M., Ben Farhat Toumi, N., & Boussaada, R. (2022). Corporate so-cial responsibility disclosure and information asymmetry: does boardroom attributes mat-ter?. Journal of Applied Accounting Research, 23(5), 897-920.
Helfaya, A., Morris, R., & Aboud, A. (2023). Investigating the Factors that Determine the ESG Disclosure Practices in Europe. Sustainability, 15(6), 1-23.
Husted, B. W., & Sousa-Filho, J. M. de. (2019). Board structure and environmental, social, and governance disclosure in Latin America. Journal of Business Research, 102, 220-227.
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability per-formance: Analysis of triple bottom line performance. Journal Business Ethics, 149, 411-432.
Hsu, S., Lin, S. W., Chen, W. P., & Huang, J. W. (2021). CEO duality, information costs, and firm performance. The North American Journal of Economics and Finance, 55, 1-18.
Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal con-trol systems. Journal of Finance, 48(3), 831-880.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Kim, J. W., & Park, C. K. (2023). Can ESG Performance Mitigate Information Asymmetry? Moderating Effect of Assurance Services. Applied Economics, 1-15.
Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. The British Accounting Review, 47(4), 409-424.
Loukil, N., Yousfi, O., & Yerbanga, R. W.-K. (2020). Does gender diversity on boards re-duce information asymmetry problems? Empirical evidence from the French market. Journal of Family Business Management, 10(2), 144-166.
Lu, L. W. (2021). The moderating effect of corporate governance on the relationship between corporate sustainability performance and corporate financial performance. International Journal of Disclosure and Governance, 18(3), 193-206.
Ma, H. Y., & Yoo, J. Y. (2022). A study on the impact of sustainable management on earn-ings persistence and market pricing: evidence from Korea. Journal of Business Economics and Management, 23(4), 818–836.
Magnanelli, B. S., & Izzo, M. F. (2017). Corporate social performance and cost of debt: The relationship. Social Responsibility Journal, 13(2), 250-265.
Manita, R., Bruna, M. G., Dang, R., & Houanti, L. H. (2018). Board gender diversity and ESG disclosure: evidence from USA. Journal of Applied Accounting Research, 19(2), 206-224.
Mahmood, Z., Kouser, R., Ali, W., Ahmad, Z., & Salman, T. (2018). Does corporate govern-ance affect sustainability disclosure? A mixed methods study. Sustainability, 10(1), 1-20.
Martínez-Ferrero, J., Rodríguez-Ariza, L., García-Sánchez, I. M., & Cuadrado-Ballesteros, B. (2018). Corporate social responsibility disclosure and information asymmetry: the role of family ownership. Review of Managerial Science, 12, 885-916.
Martínezâ€Ferrero, J., Ruizâ€Cano, D., & Garcíaâ€Sánchez, I. M. (2016). The causal link between sustainable disclosure and information asymmetry: The moderating role of the stakehold-er protection context. CSR and Environmental Management, 23(5), 319-332.
Melgarejo, M. (2019). The impact of corporate governance on earnings quality: evidence from Peru. Journal of Accounting in Emerging Economies, 9(4), 527-541.
Menicucci, E., & Paolucci, G. (2023). The influence of Italian board characteristics on envi-ronmental, social and governance dimensions. Management Decision, 61(10), 3082-3105.
Naqvi, S. K., Shahzad, F., Rehman, I. U., Qureshi, F., & Laique, U. (2021). Corporate social responsibility performance and information asymmetry: The moderating role of analyst coverage. CSR and Environmental Management, 28(6), 1549-1563.
Nakprasit, C., & Rattanayong, P. (2019). Earnings quality, corporate governance structure and corporate social performance of manufacturing companies listed on the stock ex-change of Thailand. International Journal of Interdisciplinary Research, 8(2), 109-122.
Nguyen, V. H., Agbola, F. W., & Choi, B. (2019). Does corporate social responsibility reduce information asymmetry? Empirical evidence from Australia. Australian Journal of Man-agement, 44(2), 188-211.
Puchetaâ€Martínez, M. C., Belâ€Oms, I., & Olcinaâ€Sempere, G. (2016). Corporate governance, female directors and quality of financial information. Business Ethics: A European Re-view, 25(4), 363-385.
Puchetaâ€Martínez, M. C., Gallegoâ€Ãlvarez, I. (2019). An international approach of the rela-tionship between board attributes and the disclosure of corporate social responsibility is-sues. Corporate Social Responsibility and Environmental Management, 26(3), 612-627.
Qureshi, M. A., Kirkerud, S., Theresa, K., & Ahsan, T. (2019). The impact of sustainability (environmental, social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity. Business Strategy Environment, 29(3), 1199-1214.
Rahman, H. U., Zahid, M., & Khan, M. (2021). Corporate sustainability practices: a new per-spective of linking board with firm performance. Total Quality Management e Business Excellence, 33(7-8), 929-946.
Rehman, I. U., Naqvi, S. K., Shahzad, F., & Jamil, A. (2022). Corporate social responsibility performance and information asymmetry: the moderating role of ownership concentration. Social Responsibility Journal, 18(2), 424-440.
Sarang, A. A. A., Rind, A. A., Al-Faryan, M. A. S., & Saeed, A. (2022). Women on board and the cost of equity: the mediating role of information asymmetry. Journal of Financial Reporting and Accounting, ahead-of-print.
Siddiqui, D. A., & Atique, A. (2020). Boards’ Gender Diversity and Information Asymmetry in Stock Market of Pakistan. Available at SSRN.
Siew, R. Y. J., Balatbat, M. C. A., & Carmichael, D. G. (2016). The impact of ESG disclo-sures and institutional ownership on market information asymmetry. Asia-Pacific Journal of Accounting & Economics, 23(4), 432-448.
Silva, A., & Cunha, P. R da. (2019). Influência das características do conselho de administra-ção na assimetria informacional de empresas. Revista Contemporânea de Contabilidade, 16(39), 24-43.
Tessema, A. (2019). The impact of corporate governance and political connections on infor-mation asymmetry: International evidence from banks in the Gulf Cooperation Council member countries. Journal of International Accounting, Auditing and Taxation, 35, 1-17.
Usman, B., Bernardes, O. T. F., & Kananlua, P. S. (2020). On the nexus between CSR prac-tices, ESG performance, and asymmetric information. Gadjah Mada International Jour-nal of Business, 22(2), 151-177.
Yadav, P., & Prashar, A. (2022). Board gender diversity: implications for environment, social, and governance (ESG) performance of Indian firms. International Journal of Productivity and Performance Management, 72(9), 2654-2673.
Yoon, B., & Lee, J. H. (2019). Corporate social responsibility and information asymmetry in the Korean market: Implications of chaebol affiliates. The Journal of Asian Finance, Economics and Business, 6(1), 21-31.
Acuna-Duarte, A. A., Arévalo-Alegría, M., & King-Domínguez, A. (2020). Composición del consejo de administración y desempeno financiero en mercados emergentes de América Latina: evidencia para Brasil, Chile y México. Estudios Gerenciales, 36(156), 272-287.
Akmal, M., Rashid, A., & Amin, S. (2022). Corporate governance and information asym-metry. Forman Journal of Economic Studies, 18(2), 45-69.
Alduais, F., Almasria, N. A., & Airout, R. (2022). The Moderating Effect of Corporate Gov-ernance on Corporate Social Responsibility and Information Asymmetry: An Empirical Study of Chinese Listed Companies. Economies, 10(280), 1-23.
Almulhim, A. A. (2023). Effects of board characteristics on information asymmetry: Evi-dence from the alternative investment market. Heliyon, 9, 1-16.
Benkraiem, R., Hamrouni, A., Lakhal, F., & Toumi, N. (2017). Board independence, gender diversity and CEO compensation. Journal of Business in Society, 17(5), 845-860.
Bae, S. M., Masud, M. A. K., & Kim, J. D. (2018). A cross-country investigation of corporate governance and corporate sustainability disclosure. Sustainability, 10(8), 1-16.
Cherkasova, V., & Nenuzhenko, I. (2022). Investment in ESG Projects and Corporate Per-formance of Multinational Companies. Journal of Economic Integration, 37(1), 54-92.
Chouaibi, S., Chouaibi, J., & Rossi, M. (2022). ESG and corporate financial performance: the mediating role of green innovation: UK common law versus Germany civil law. EuroMed Journal of Business, 17(1), 46-71.
Cui, J., Jo, H., & Na, H. (2018). Does corporate social responsibility affect information asymmetry?. Journal of Business Ethics, 148, 549-572.
Dandaro, F. M., & Lima, F. G. (2022). ESG Performance and Credit Risk in Latin Ameri-ca. Sociedade, Contabilidade e Gestão, 17(3), 40-56.
Diebecker, J., & Sommer, F. (2017). The impact of corporate sustainability performance on information asymmetry: the role of institutional differences. Review of Managerial Sci-ence, 11(2), 471-517.
Duque-Grisales, E., & Aguilera-Caracuel, J. (2021). Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal Business Ethics, 168(2), 315-334.
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law and Economics, 26(2), 327-349.
Fernandes, S. M., Bornia, A. C., & Nakamura, L. R. (2018). The influence of boards of direc-tors on environmental disclosure. Management Decision, 57(9), 2358-2382.
Goh, B. W., Lee, J., Ng, J., & Ow, Y. K. (2016). The effect of board independence on infor-mation asymmetry. European Accounting Review, 25(1), 155-182.
Gul, F. A., Hutchinson, M., & Lai, K. M. Y. (2013). Gender-diverse boards and properties of analyst earnings forecasts. Accounting Horizons, 27(3), 511-538.
Hamrouni, A., Bouattour, M., Ben Farhat Toumi, N., & Boussaada, R. (2022). Corporate so-cial responsibility disclosure and information asymmetry: does boardroom attributes mat-ter?. Journal of Applied Accounting Research, 23(5), 897-920.
Helfaya, A., Morris, R., & Aboud, A. (2023). Investigating the Factors that Determine the ESG Disclosure Practices in Europe. Sustainability, 15(6), 1-23.
Husted, B. W., & Sousa-Filho, J. M. de. (2019). Board structure and environmental, social, and governance disclosure in Latin America. Journal of Business Research, 102, 220-227.
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability per-formance: Analysis of triple bottom line performance. Journal Business Ethics, 149, 411-432.
Hsu, S., Lin, S. W., Chen, W. P., & Huang, J. W. (2021). CEO duality, information costs, and firm performance. The North American Journal of Economics and Finance, 55, 1-18.
Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal con-trol systems. Journal of Finance, 48(3), 831-880.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Kim, J. W., & Park, C. K. (2023). Can ESG Performance Mitigate Information Asymmetry? Moderating Effect of Assurance Services. Applied Economics, 1-15.
Liao, L., Luo, L., & Tang, Q. (2015). Gender diversity, board independence, environmental committee and greenhouse gas disclosure. The British Accounting Review, 47(4), 409-424.
Loukil, N., Yousfi, O., & Yerbanga, R. W.-K. (2020). Does gender diversity on boards re-duce information asymmetry problems? Empirical evidence from the French market. Journal of Family Business Management, 10(2), 144-166.
Lu, L. W. (2021). The moderating effect of corporate governance on the relationship between corporate sustainability performance and corporate financial performance. International Journal of Disclosure and Governance, 18(3), 193-206.
Ma, H. Y., & Yoo, J. Y. (2022). A study on the impact of sustainable management on earn-ings persistence and market pricing: evidence from Korea. Journal of Business Economics and Management, 23(4), 818–836.
Magnanelli, B. S., & Izzo, M. F. (2017). Corporate social performance and cost of debt: The relationship. Social Responsibility Journal, 13(2), 250-265.
Manita, R., Bruna, M. G., Dang, R., & Houanti, L. H. (2018). Board gender diversity and ESG disclosure: evidence from USA. Journal of Applied Accounting Research, 19(2), 206-224.
Mahmood, Z., Kouser, R., Ali, W., Ahmad, Z., & Salman, T. (2018). Does corporate govern-ance affect sustainability disclosure? A mixed methods study. Sustainability, 10(1), 1-20.
Martínez-Ferrero, J., Rodríguez-Ariza, L., García-Sánchez, I. M., & Cuadrado-Ballesteros, B. (2018). Corporate social responsibility disclosure and information asymmetry: the role of family ownership. Review of Managerial Science, 12, 885-916.
Martínezâ€Ferrero, J., Ruizâ€Cano, D., & Garcíaâ€Sánchez, I. M. (2016). The causal link between sustainable disclosure and information asymmetry: The moderating role of the stakehold-er protection context. CSR and Environmental Management, 23(5), 319-332.
Melgarejo, M. (2019). The impact of corporate governance on earnings quality: evidence from Peru. Journal of Accounting in Emerging Economies, 9(4), 527-541.
Menicucci, E., & Paolucci, G. (2023). The influence of Italian board characteristics on envi-ronmental, social and governance dimensions. Management Decision, 61(10), 3082-3105.
Naqvi, S. K., Shahzad, F., Rehman, I. U., Qureshi, F., & Laique, U. (2021). Corporate social responsibility performance and information asymmetry: The moderating role of analyst coverage. CSR and Environmental Management, 28(6), 1549-1563.
Nakprasit, C., & Rattanayong, P. (2019). Earnings quality, corporate governance structure and corporate social performance of manufacturing companies listed on the stock ex-change of Thailand. International Journal of Interdisciplinary Research, 8(2), 109-122.
Nguyen, V. H., Agbola, F. W., & Choi, B. (2019). Does corporate social responsibility reduce information asymmetry? Empirical evidence from Australia. Australian Journal of Man-agement, 44(2), 188-211.
Puchetaâ€Martínez, M. C., Belâ€Oms, I., & Olcinaâ€Sempere, G. (2016). Corporate governance, female directors and quality of financial information. Business Ethics: A European Re-view, 25(4), 363-385.
Puchetaâ€Martínez, M. C., Gallegoâ€Ãlvarez, I. (2019). An international approach of the rela-tionship between board attributes and the disclosure of corporate social responsibility is-sues. Corporate Social Responsibility and Environmental Management, 26(3), 612-627.
Qureshi, M. A., Kirkerud, S., Theresa, K., & Ahsan, T. (2019). The impact of sustainability (environmental, social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity. Business Strategy Environment, 29(3), 1199-1214.
Rahman, H. U., Zahid, M., & Khan, M. (2021). Corporate sustainability practices: a new per-spective of linking board with firm performance. Total Quality Management e Business Excellence, 33(7-8), 929-946.
Rehman, I. U., Naqvi, S. K., Shahzad, F., & Jamil, A. (2022). Corporate social responsibility performance and information asymmetry: the moderating role of ownership concentration. Social Responsibility Journal, 18(2), 424-440.
Sarang, A. A. A., Rind, A. A., Al-Faryan, M. A. S., & Saeed, A. (2022). Women on board and the cost of equity: the mediating role of information asymmetry. Journal of Financial Reporting and Accounting, ahead-of-print.
Siddiqui, D. A., & Atique, A. (2020). Boards’ Gender Diversity and Information Asymmetry in Stock Market of Pakistan. Available at SSRN.
Siew, R. Y. J., Balatbat, M. C. A., & Carmichael, D. G. (2016). The impact of ESG disclo-sures and institutional ownership on market information asymmetry. Asia-Pacific Journal of Accounting & Economics, 23(4), 432-448.
Silva, A., & Cunha, P. R da. (2019). Influência das características do conselho de administra-ção na assimetria informacional de empresas. Revista Contemporânea de Contabilidade, 16(39), 24-43.
Tessema, A. (2019). The impact of corporate governance and political connections on infor-mation asymmetry: International evidence from banks in the Gulf Cooperation Council member countries. Journal of International Accounting, Auditing and Taxation, 35, 1-17.
Usman, B., Bernardes, O. T. F., & Kananlua, P. S. (2020). On the nexus between CSR prac-tices, ESG performance, and asymmetric information. Gadjah Mada International Jour-nal of Business, 22(2), 151-177.
Yadav, P., & Prashar, A. (2022). Board gender diversity: implications for environment, social, and governance (ESG) performance of Indian firms. International Journal of Productivity and Performance Management, 72(9), 2654-2673.
Yoon, B., & Lee, J. H. (2019). Corporate social responsibility and information asymmetry in the Korean market: Implications of chaebol affiliates. The Journal of Asian Finance, Economics and Business, 6(1), 21-31.
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2026-05-04
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Relationship between environmental, social and governance disclosure and board of directors and information asymmetry in latin american companies. (2026). Enfoque: Reflexão Contábil, 45(2), 180-200. https://doi.org/10.4025/enfoque.v45i2.73004
