Does Board Diversity Matter on Corporate Social Disclosure? An Indonesian Evidence

Abstract

The objective of this study to examine the effect of board diversity on corporate social disclosure, in which case the board diversity is proxied by board age, board gender, board independence, board size and board tenure. Testing were conducted at public firms listed on the Indonesia Stock Exchange that disclose corporate social responsibility in annual report or sustainability report during the period of 2010-2012 using multiple regression analysis.  The results showed that board age and board size have significant positive effect on corporate social disclosure.  Board gender and board tenure have significant negative effect on corporate social disclosure, while board independency doesn’t affect on it.  The research findings indicate the dominance of older boards group are able to respond to the interest of diverse stakeholders, and larger board represents the more experience, knowledge, skill and insight to better encourage ethical corporate behavior.  Long tenure board and gender composition in board member need to be scrutinized in their role to lead the strategy and policies related to sustainability issues.  The longer board tenure can reduce the effectiveness of the oversight functions to executive behaviors and have negative consequences on governance, in ensuring equality in the relationship between stakeholders.  Meanwhile, the existence and the low number of female board in the corporate board without adequate expertise or experience are unable to encourage altruistic behavior and better perspective to ethical and environmental concerns.

Keywords : board diversity, board of commissioner, corporate social disclosure