The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/2040-8021.htm

Impact of
Impact of foreign directors on foreign
carbon emissions performance directors

and disclosure: empirical evidence

from France
Ghassan H. Mardini and Fathia Elleuch Lahyani Received 13 September 2020
Revised 14 January 2021
College of Business and Economics, Qatar University, Doha, Qatar 25 March 2021
16 May 2021
Accepted 15 June 2021

Abstract
Purpose – Drawing on multiple theoretical approaches, this study aims to investigate whether the presence
of foreign directors on the board is associated with a company’s carbon emissions performance (CP) and
carbon disclosure (CD).
Design/methodology/approach – The sample comprises 67 non-financial listed firms from the Société
des Bourses Françaises 120 index for the period 2010–2018 and the analysis relies on carbon reports from the
carbon disclosure project, using a panel data analysis based on random-effects regression.
Findings – The paper finds that having foreign directors has a positive significant impact on both aspects
of carbon emissions (CE), namely, CP and CD. Foreign directors’ incentives to reveal extensive sustainability
information depend on the volume of CE. The findings also indicate that foreign directors are more engaged in
enhancing environmental transparency and lowering information asymmetry to maintain/ improve corporate
legitimacy.
Practical implications – The findings show that foreign directors play a vital role as one of the main
pillars of a carbon model for sustainable carbon activities and disclosure. The evidence has important insights
for the managers of French listed firms, shareholders and regulators.
Social implications – The evidence underlines the value of foreign directors as a critical resource that
enhances CE strategic decisions. Thus, the findings are valuable to managers, as they may consider balancing
between foreign and local directors to benefit from a rich heterogeneous resource encompassing the diverse merits
of both types of directors, with particular emphasis on foreign directors’ international exposure and experience.
Originality/value – This study offers significant insights, as it examines the relationship between foreign
directors and both the CP and CD in the French context, which is characterized by a non-English civil law
system and the issuing of many environmental, climate and emission control laws.
Keywords Foreign directors, Carbon emissions, Carbon performance, Carbon disclosure,
Carbon accounting
Paper type Research paper

1. Introduction
Over the past decade, regulators and stakeholders have been increasingly expecting firms to
provide information beyond financial and performance information (Busch and Hoffman,
2011). Specifically, it is expected that firms disclose non-financial information such as
carbon emissions (CE) (Li et al., 2016). Recently, climate change has become a global issue
that requires firms to report their CE in their annual reports or through specific channels.
Sustainability Accounting,
The authors would like to thank Carol Adams, Editor of Sustainability Accounting, Management and Management and Policy Journal
Policy Journal. We also truly appreciate the three anonymous reviewers for their valuable comments © Emerald Publishing Limited
2040-8021
and feedback. DOI 10.1108/SAMPJ-09-2020-0323
SAMPJ The carbon disclosure project (CDP) is an important channel through which a firm provides
information on its CE in the form of carbon performance (CP) and carbon disclosure (CD)
information [1]. The CDP is a not-for-profit charity that provides a global disclosure system
for stakeholders, regions and countries to manage their environmental impacts (CDP, 2020).
CDP membership is voluntary for countries from around the globe and France is a member.
Using resource dependence, agency and legitimacy theories, our paper has two main
objectives: examining the impact of foreign directors on CP and CD. Additionally, our
research addresses the drivers of CD by investigating the potential effect of foreign directors
on CD when segregating firms based on their high/low carbon impact (Qian and
Schaltegger, 2017), varying levels of institutional ownership (Kim et al., 2020) and the Paris
Agreement adoption period (before and after). Our study, thus, addresses the research
question of to what extent the presence of foreign directors on the board is associated with
the CD and CP of French listed firms, for which there is no empirical evidence in the
literature to the best of our knowledge.
We chose the French context because many prior studies have provided empirical
evidence on Anglo-Saxon data (Masulis et al., 2012; Elsayih, 2015; Ortiz-de-Mandojana et al.,
2016; Ben-Amar et al., 2017; Haque, 2017; Kiliç and Kuzey, 2019) but the evidence is still
lacking in other contexts in which there may be other factors associated with CD and CP. For
instance, in 2016, France adopted the global climate change treaty called the Paris Agreement
[2], the main objective of which is to strengthen global efforts to reduce carbon emissions.
The European Union (EU) initially adopted this agreement in December 2015 at the Paris
Climate Conference, with the EU formally approving the agreement in October 2016 (coming
into force on November 4, 2016). Following the Paris Agreement, France launched a new
initiative in terms of enhancing environmental practices and encouraging institutional
investors to analyze and publish climate-change risks in their annual reports. Indeed, article
173-VI (2015) of France’s Law on Energy Transition for Green Growth recognizes the
important role that investors must play in incorporating a climate-change dimension via
implementing low carbon strategies. By mobilizing institutional investors in addressing
climate-change challenges, France appears to have taken the initiative in fostering change
among corporate governance actors (Depoers et al., 2016). This law guides the transition
toward a low-carbon economy. Therefore, France, being a member of the EU climate-change
framework, is committed to setting challenging national greenhouse gas emission-reduction
goals and meeting these goals represents significant institutional pressure.
Moreover, Iliev and Roth (2018) documented that corporate boards gain substantial learning
from foreign directors. However, we believe that this relationship is stronger in countries with a
non-English civil law system such as France. Ball et al. (2000) noted that civil law countries are
typically stakeholder-oriented, disseminating a larger volume of information to users compared
to shareholder-oriented English common law countries. In particular, environmental regulations
in France (Grenelle I and II) reflect the institutional pressure to report environmental
information, support the implementation of the best environmental practices and ensure better
engagement with stakeholders (Depoers et al., 2016). The Grenelle II (2010) law targets fighting
climate change by decreasing greenhouse-gas emissions to 50% of 2010 levels by 2020.
Globally, the internationalization of French firms’ activities, coupled with greater awareness of
climate change impacts, has led to higher demand for environmental information. Specifically,
Masulis et al. (2012) argued that the presence of foreigners with varied international expertise in
the boardroom is a logical consequence of the globalization of their activities.
Our paper contributes to knowledge in four ways. First, the current literature suffers
from insufficient empirical evidence, with few studies focusing on the impact of foreign
directors on CP or CD (i.e. Ben-Amar et al., 2017; Haque, 2017). We focus both on CP and CD
because prior studies have tended to focus on only one aspect of CE (CP or CD) without Impact of
examining whether improved CP determines the extent of CD (Depoers et al., 2016; Haque, foreign
2017; Ben-Amar et al., 2017; Song et al., 2020; Zaid et al., 2020). For instance, Haque (2017)
investigated the impact of board characteristics (i.e. board gender and independence) and
directors
sustainable compensation policies on CD among UK firms, while Ben-Amar et al. (2017)
examined the effect of board diversity (i.e. board gender and foreign directors) on CP among
Canadian firms. Moreover, prior empirical evidence on the effects of foreign directors on CE
or CD in the French context is relatively scarce, despite the increasing institutional and
stakeholder pressure to enhance both CP and CD. Depoers et al. (2016) examined the level of
the CDP’s CD disclosure without considering the effects of board diversity or the CP. Thus,
the current study not only extends the CE literature in general but also enhances our
understanding of the patterns of both CE aspects (CP and CD).
Second, to the best of our knowledge, prior studies have not investigated foreign directors’
role and incentives in driving both CP and CD from multiple theoretical perspectives.
Specifically, our approach of including both aspects of CE, based on multiple theoretical
approaches, enhances the results, provides practical and theoretical implications and adds to the
emerging literature on CE by investigating the impact of foreign directors on both its aspects.
Third, an additional analysis that categorizes firms based on their CE level is included in
the current study, which further contributes to the literature on CE in general. In particular,
firms with varying degrees of CE may behave differently when taking CD decisions (Lee,
2012; Doda et al., 2016; Bui et al., 2020). Segregating the environmental impact of industries
in this way can help us better understand the impact of foreign directors on CD. Fourth,
given the merits of foreign directors, we investigate their vital role in CD in the French
context through further analysis of the drivers of CD, namely, the level of institutional
ownership and the Paris Agreement adoption period.
The remainder of the paper is structured as follows. Section 2 discusses the theoretical
framework and reviews the literature to develop the hypotheses. Section 3 illustrates the
research methodology, while Section 4 presents and discusses the results. Section 5 provides
the conclusions and practical implications.

2. Theoretical framework, literature review and hypotheses development

2.1 Theoretical framework
Resource dependence theory is based on a theoretical assumption that a firm must engage
with its surrounding environment (i.e. other firms) to acquire resources (Archibald, 2007).
Scholars have argued that such engagement encompasses various inter-dependencies such
as environmental pressures that lead to changing the firm’s internal elements (i.e. board
members) and its behavior to acquire resources (Hillman et al., 2009; Davis and Cobb, 2010;
Biermann and Harsch, 2017). Moreover, this theory underscores the resource-provisioning
role of corporate board members (Hillman and Dalziel, 2003). Resource dependence theory,
thus, provides deep insights concerning the rationale behind hiring foreign directors, who
enable a better understanding of international practices and settings, including
environmental concerns (Hillman et al., 2009; Khatib et al., 2020), particularly in opaque
industries with high a carbon environmental impact such as high CE industries.
Agency theory posits that the interests of managers (agents) are not always aligned with
the interests of shareholders (principals/owners) (Fama and Jensen, 1983). This conflict leads
to an agency problem requiring strong CG mechanisms (i.e. foreign directors and board
diversity) to ensure shareholders’ objectives are aligned with managers’ interests (Guthrie
and Parker, 1990; Bushman and Smith, 2001). Specifically, agency theory scholars believe
that a diverse board with foreign directors has more experience and is, thus, better able to
SAMPJ monitor management behavior effectively, which is likely to enhance the firm’s voluntarily
disclosure of social and environmental information (Dam and Scholtens, 2013; Ntim and
Soobaroyen, 2013; Kao et al., 2018). However, few prior studies have challenged agency
theory, leading to a debate regarding foreign directors’ ability to monitor managers’
behavior to mitigate the agency problem (Brick et al., 2006). We believe, however, that the
agency theory perspective should be included in our study as an empirically valid
perspective, as it provides unique insights into the outcome uncertainty of the agency
conflict (Eisenhardt, 1989). Specifically, CD and CP are considered agency tools used by
foreign directors to monitor managers’ opportunistic behavior to reduce agency problems
and support stakeholders’ decision-making needs (Ben-Amar et al., 2017).
Legitimacy theory seeks to conceptualize the relationship between an organization and
society (Branco and Rodrigues, 2008; Mahadeo et al., 2011; Soobaroyen and Ntim, 2013).
Specifically, an organization needs to operate following (and be aligned with) societal values,
beliefs and norms to ensure it is seen as legitimate, and thus able to secure resources and
support from societal actors (Soobaroyen and Ntim, 2013). Disclosure is part of the process
of communicating this alignment to maintain, enhance and/or repair organizational
legitimacy and in this specific case, in terms of recognizing the societal concerns about CP
and CD and its impact on climate change (Soobaroyen and Ntim, 2013; Patten, 2015). Hence,
carbon emissions of performance and disclosure are considered as legitimacy tools to
determine the firm’s willingness to meet social, environmental and stakeholders’
expectations, which will enhance the firm’s success due to its social reputation. In other
words, legitimacy theory scholars have argued that social and environmental disclosures
are a legitimate tool used by a firm to enhance its legitimacy in its society (Dowling and
Pfeffer, 1975; Patten, 1992, 2002, 2015; Cowan and Deegan, 2011; Michelon and Parbonetti,
2012). Following this theory, prior studies have noted that sustainable corporate governance
(CG) mechanisms (i.e. foreign directors) enhance the social and environmental disclosures
that are considered to be a legitimate approach to improving or repairing a firm’s image,
thus maintaining legitimacy (Cho and Patten, 2007; Milne et al., 2009; Qian and Schaltegger,
2017).
We believe that multiple theoretical perspectives enable us to enhance our understanding
concerning this association and to better interpret our results, thus contributing to the
existing literature. In examining the arguments of resource dependence, agency and
legitimacy theories, we found an interesting theoretical link; specifically, weak monitoring
by foreign directors provides firms (i.e. managers) with opportunities to address stakeholder
pressure regarding CE disclosure and to disclose information that is in their interests
(Patten, 2015; Kao et al., 2018). Therefore, as we consider that the impact of foreign directors
on CD and CP is crucial for stakeholders, we formulate our hypotheses from the perspective
of multiple theoretical frameworks grounded on resource dependence, agency and
legitimacy theories, as well as based on the literature review findings discussed in the
following sub-section.

2.2 Literature review and hypotheses development

CG determines how the board directs and manages the company and how it sets the values
of that company to maximize profits through operational management by full-time
executives (Ruigrok et al., 2007; Masulis et al., 2012; Song et al., 2020). Board directors, thus,
play an important role in financial performance with maximizing profits and may also play
a similar role for CP (Garcia-Meca and Sanchez-Ballesta, 2010). Prior studies have
investigated the impact of CG mechanisms in general on CP (Prado-Lorenzo and Garcia-
Sanchez, 2010; Haque, 2017; Ben-Amar et al., 2017; Elsayih et al., 2018; Kiliç and Kuzey, 2019).
For instance, Elsayih et al. (2018) investigated the effect of CG systems on CP, based on Impact of
Australian data, finding that CG insignificantly affects CP, while only firms that undertake foreign
green initiatives and a proactive carbon strategy have superior CP. Moreover, Haque (2017)
focused on board characteristics and their impact on CP by using a fixed-effect model to
directors
analyze 256 non-financial FTSE 350 UK firms, finding a positive and significant impact on
CP for board independence and board gender diversity. More recently, Bui et al. (2020)
investigated the impact of CG mechanisms on the CP of S&P 500 listed firms, finding that
rapid reporting to the board enhances CP through the provision of further sustainable and
transparent carbon information.
From the resource dependence perspective, foreign directors in the boardroom have
several merits, owing to their diverse skills, networks and perspectives (Masulis et al., 2012;
Ben-Amar et al., 2017; Iliev and Roth, 2018; Baker et al., 2020; Khatib et al., 2020). Given their
international background, they provide a rich learning experience (Masulis et al., 2012; Iliev
and Roth, 2018). Foreign directors seem to influence the board’s decisions toward
intensifying the firm’s sustainability engagements and support the undertaking of effective
climate-change activities (Ruigrok et al., 2007; Post et al., 2011; El-Bassiouny and El-
Bassiouny, 2019; Song et al., 2020; Zaid et al., 2020). For instance, Post et al. (2011) found that
boards with a higher proportion of foreign directors are more engaged in sustainability,
finding that foreign directors have a positive significant impact on corporate sustainability
performance.
Accordingly, prior studies have shown that CG mechanisms play a crucial role in CP and
firm performance; however, we believe that an in-depth investigation of the impact of
foreign directors on CP requires further empirical evidence. Specifically, most prior studies
have considered CG mechanisms in general, while our paper considers a different approach,
which provides further insights regarding the importance of foreign directors and their
impact on CP across its three scopes (see endnote [1] for details). To the best of our
knowledge, Ben-Amar et al.’s (2017) paper is the only exception as it used a similar approach
to ours in relation to CP. They investigated the impact of foreign directors on CP using data
extracted from Canadian firms’ CDP reports. They found that the higher the percentage of
foreign members on the board, the better the firm’s CP across all CPs scopes. Moreover, we
believe it is extremely important to address this research gap, as foreign directors can help
firms to manage their external environment and sustainability resources and to enhance
their estimations to reduce the uncertainty related to the market (Ben-Amar et al., 2017). In
addition, foreign directors’ merits are likely to influence board decisions that are aimed at
intensifying the firm’s environmental engagements (Ruigrok et al., 2007; Masulis et al., 2012;
El-Bassiouny and El-Bassiouny, 2019).
In summary, prior studies have argued that foreign directors are motivated to monitor
CE issues. Specifically, this leads us to consider that foreign directors enhance CP, which
addresses the gap between the firm’s CE and its strong CG structure. Our study contributes
to the literature by focusing on foreign board directors in non-financial French listed firms
from the perspective of resource dependence, agency and legitimacy theories. It also
considers all the three scopes of CP to enhance its findings and its generalizability.
Additionally, we examine the decarbonization process of firms based on the reduction of
their total CE on a yearly basis. From the resource dependence perspective, we believe that
foreign directors enrich board resources (Hillman and Dalziel, 2003; Masulis et al., 2012) due
to their greater sensitivity to climate-change challenges (El-Bassiouny and El-Bassiouny,
2019; Song et al., 2020; Zaid et al., 2020). Given the increasing institutional and societal
pressure to address CE concerns, we argue that foreign directors are likely to use CP-related
information to reduce CE asymmetry by providing further relevant information to
SAMPJ stakeholders. In alignment with the theoretical framework perspective (Section 2.1), we
assume that firms with more foreign directors are more willing to enhance their CP through
many communication channels (e.g. CDP) to achieve a green carbon image and enhance their
competitive advantage among their peers. We, thus, propose the following hypotheses
related to CP:

H1. There is a significant and positive association between the proportion of foreign
directors on the board and the firm’s CP (Scope 1, 2 and 3).
H2. There is a significant impact of the proportion of foreign directors on the board in
decreasing CE on a yearly basis.
Furthermore, the members of the board of directors have their own connections and peers,
which supports the firm in managing its resources and helps attract external funds through
networking with external firms (i.e. foundations) through the board’s communications (Liao
et al., 2015). They also help the firm to provide highly transparent and trusted information,
with cost reductions in transactions with stakeholders (Yousf et al., 2018). Moreover, they
also monitor the credibility of the firm’s disclosure strategy and enhance the quality of CD
information (Depoers et al., 2016). Prior studies on carbon accounting have investigated the
role of board diversity (i.e. board independence and board gender diversity) on CD
(Galbreath, 2009; Prado-Lorenzo and Garcia-Sanchez, 2010; Haque and Deegan, 2011; Post
et al., 2011; Rankin et al., 2011; Ortiz-de-Mandojana et al., 2016; Kiliç and Kuzey, 2019; Bui
et al., 2020). For instance, Rankin et al. (2011) found that greenhouse-gas creditability and CD
quality increased in the energy, mining and industrial sectors in firms with a board with
greater independence and board gender diversity (that included women). Consequently,
higher disclosure levels reflect higher transparency, lower asymmetry and underscore a
board’s collective efforts to address carbon issues (Luo et al., 2012). Moreover, board
directors can use CD as a tool to address potential legitimacy threats (Vesty et al., 2015; Li
et al., 2016; Ortiz-de-Mandojana et al., 2016; Qian and Schaltegger, 2017; Kiliç and Kuzey,
2019). For instance, Vesty et al. (2015) found that CE figures are important in asset valuation
for long-term investment projects. Interestingly, they asserted that the extent of CD
published in the CDP reports [3] reflects boardroom and management efforts to publicly
communicate their sustainability performance to make them accountable. Interestingly,
Depoers et al. (2016, p. 4) posited that French listed firms adopt selective and “customized”
environmental disclosure strategies to respond to their stakeholders’ information needs.
Regarding foreign directors, Kiliç and Kuzey (2019) argued that a diverse board structure
in terms of local and foreign directors adds heterogeneity, which leads not only to
encouraging board responsibility to protect the shareholders’ interests but also to
considering stakeholders’ decision-making needs. Accordingly, scholars and policymakers
are showing an increased interest in understanding foreign directors’ impact on CD (El-
Kassar et al., 2015; García-Blandín et al., 2019; Kiliç and Kuzey, 2019).
For instance, García-Blandçn et al. (2019) found that boards with foreign directors and
CEOs achieve better financial and environmental CD compared to boards with only local
directors and CEOs. They found that foreign directors are likely to have a further role,
beyond maximizing the firm’s profit, in demonstrating higher sustainable environmental
performance. Few studies, however, have been conducted to investigate how foreign
directors contribute to making better decisions with carbon accounting and CD actions (i.e.
climate change). The small number of prior studies considering foreign directors’ influence
on CD extracted from CDP reports is what motivates our research because the current
literature suffers from insufficient empirical evidence for this association. In accordance Impact of
with prior studies’ findings, we develop further hypotheses related to CD: foreign
H3. There is a significant and positive association between the proportion of foreign directors
directors and the level of CD.

3. Methodology
3.1 Sample
Our initial sample comprised Société des Bourses Françaises (SBF-120) French listed
companies. We chose SBF-120 for two reasons. First, although SBF-120 firms are the most
active in the stock market, the relationship between CD, CP and CG, has received little
attention (Depoers et al., 2016). Second, the investigation of SBF-120 firms offers significant
insights, as these firms are visible and exposed to institutional and growing societal
pressure to focus on their CE. For instance, according to the CDP annual report of 2017,
several SBF-120 firms such as L’Oréal, Carrefour, Air Liquide, EDF, JCDECAUX and
Danone, were among those in “Rank A,” in terms of climate change reduction and were the
most pioneering firms in leading environmental transparency and performance. SBF-120
listed firms were, thus, chosen as the population study; however, eight financial firms were
excluded. We also excluded non-financial firms that had not responded to CDP
questionnaires and those with missing CE data (45 firms). Consequently, our final sample
comprised 67 non-financial firms, with 603 observations for the period 2010 to 2018 [4].
Table 1 shows our sample distribution per non-financial industry. It also provides details
regarding low/high carbon industries, showing that 44 of the 67 firms are considered low-
carbon industries, while 23 firms are considered high-carbon industries. High-carbon
industries involve chemicals, automobiles and components, forest products, gas and
electrical utilities, oil and gas, mining, pipelines, metals and transportation, with the
remainder considered low-carbon industries (Qian and Schaltegger, 2017; Bui et al., 2020).

Industry classification Sample (67 firms) Firms per sector (%)

High-carbon industries
Automobiles and components 4 5.97
Chemicals 3 4.48
Gas and electric utilities 4 5.97
Oil and gas 4 5.97
Metals and mining 2 2.99
Transportation 5 7.46
Forest products 1 1.49
Total high-carbon industries 23 34.33
Low-carbon industries
Industrials 6 8.96
Consumer staples 15 22.39
Consumer discretionary 6 8.96
Health care 4 5.97
Communication services 4 5.97
Information technology 5 7.46 Table 1.
Real estate 4 5.97 Final sample
Total low-carbon industries 44 65.67 industry
Overall Total 67 100 classification
SAMPJ The data set of CP and CD information was extracted from the CDP reports database, while
CG and firm characteristics were extracted from the Thomson Reuters database.

3.2 Variable definition and research models

CP is measured based on three sub-scopes of CP (see endnote [1]):
(1) all direct emissions (Scope 1);
(2) indirect emissions (from energy purchased and used) (Scope 2) and
(3) all other indirect emissions (Scope 3).

These are reported in the CDP reports as a percentage of carbon efforts (Hoffmann and
Busch, 2008; CDP, 2020). Our study, thus, considers all the three CP scopes to enhance its
findings and its generalizability. In addition, the CP measure based on the CE reduction,
which is proxied as a dummy variable, examines whether firms achieved their
decarbonization target by reducing their total CE during the current year compared to the
previous year (Bui et al., 2020).
Based on a disclosure index approach developed by the CDP within a questionnaire
survey, CD assesses the climate risks, challenges and opportunities that a firm is facing
due to climate change (CDP, 2020). Respondents (firms) report climate-related risks,
their target for reducing carbon emissions and climate impact. In summary, a higher
percentage on the CD index denotes more comprehensive and higher quality disclosure.
In alignment with prior studies, we use the CD index provided by the CDP (as a
percentage) to reflect the extent and quality of CD (Luo and Tang, 2014; Ben-Amar et al.,
2017 Bui et al.,2020).
The foreign directors’ variable is measured as the ratio of the number of foreign
directors to the total number of board directors (Ben-Amar et al., 2017; Elsayih et al.,
2018; Kiliç and Kuzey, 2019). To enhance our findings, we add the low/high carbon
industries variable to investigate whether foreign directors have any further
significant impact on low- or high-carbon industries (see Section 3.1 for definitions).
To check the consistency of our results, we distinguish between firms with low/high
institutional investments (Kim et al., 2020) and before/after the Paris Agreement. We
also include several control variables that are consistent with prior disclosure studies.
Control variables include CG variables such as gender diversity, board size, the
number of board meetings and board independence. We also include a firm’s
characteristics, e.g. research and development (R&D) intensity, institutional
ownership, productivity, firm size, leverage and profitability. Table 2 lists and defines
the variables, while Figure 1 illustrates the research model that follows the multiple
theoretical approaches (resource dependence, agency and legitimacy theories) and the
variables used to examine the impact of foreign directors on the CP and CD of French
non-financial SBF-120 firms.
We use random effects regressions. Specifically, Breusch–Pagan Lagrange
multiplier statistics suggest that it is more appropriate to model our data set with
random effects than with ordinary least squares (OLS) regressions (Prob > chi2 = 0.00),
while Hausman statistics indicate that random effects are more appropriate for our
analysis than fixed effects (p > 0.05) (Wooldridge, 2010). Sections 4.2.1 and 4.2.3 detail
the statistics related to the two tests, while Section 4.2.4 shows our endogeneity tests to
validate our results.
Accordingly, we construct the following random-effects models:
 CPt ¼ a0 þ b 1 foreign directorst þ b 2 gendert þ b 3 independencet þ b 4 Board sizet Impact of
þ b 5 board meetingst þ b 6 R&D intensityt þ b 7 liquidityt þ b 8 sizet þ b 9 ROEt foreign
directors
þ b 10 productiont þ b 11 leveraget þ b 12 institutional ownershipt

þ b 13 high carbont þ b 14 Year þ « t (1)

CDt ¼ a0 þ b 1 foreign directorst þ b 2 gendert þ b 3 independencet þ b 4 Board sizet

þ b 5 board meetingst þ b 6 R&D intensityt þ b 7 liquidityt þ b 8 sizet þ b 9 ROEt
þ b 10 productiont þ b 11 leveraget þ b 12 institutional ownershipt

þ b 13 high carbont þ b 14 Year þ « t (2)

Variable Definition

1- Dependent variables
CD Carbon disclosure index in percentage provided in the CDP report
CP1 The percentage of direct carbon performance provided in the CDP report
CP2 The percentage of indirect carbon performance provided in the CDP report
CP3 The percentage of other carbon performance provided in the CDP report
DCP Dummy variable, which is equal to 1 if the firm decreased its total carbon
emission compared to the previous year provided in the CDP report and 0
otherwise
2- Independent variable
Foreign directors The number of foreign directors to the total number of board directors
3- Control variables
A. Governance
Gender Gender diversity is the ratio of the number of female directors to the total
number of directors
Independence Board independence corresponds to the ratio of the number of independent
non-executive directors to the total number of directors
Board size Board size corresponds to the total number of board members per year
Board meetings Board meetings correspond to the total number of board meetings per year
B. Firm characteristics
R&D intensity Research and development expenses to total assets
Liquidity Difference between current assets and current liabilities divided by total
assets
Firm size The logarithm of total assets
ROE The ratio of net income to shareholders’ equity
Productivity The ratio of revenue to total assets
Leverage The ratio of total liabilities to total assets
Institutional ownership Institutional ownership is proxied as the ratio of shares owned by
institutions to total shares outstanding
High-carbon Dummy variable that equals 1 if the firm has a high-carbon impact. High-
carbon industries involve chemicals, automobiles and components, forest Table 2.
products, gas and electrical utilities, oil and gas, mining, pipelines, metals Definition of the
and transportation variables
SAMPJ Governance
(Control Variables)
Gender
Independence
Board size
Board meengs

Resource
Dependence
Theory
Carbon Accounng
H1 CP1

Foreign H1 CP2
Mulple Theorecal Approach
Directors H1 CP3
H2 ΔCP
H3 CD

Agency Theory Legimacy Theory

Firm Characteriscs
(Control Variables)

R&D Intensity

Liquidity

Firm size

Return on Equity

Producvity
Figure 1.
Leverage
Foreign directors and
carbon accounting Instuonal Ownership

research model High-Carbon

Here, CPt is the carbon performance measure. CPt denotes Scope 1 (CP1), Scope 2 (CP2), Scope 3
(CP3) and carbon emission reduction (DCP). Equation (1), thus, represents Models 1–4,
respectively. CDt is the carbon disclosure, which is included in equation (2) and is represented
in Model 5. CG variables include foreign directors, gender diversity, board independence, the
board size and the number of board meetings. Firm characteristics include R&D intensity,
liquidity, firm size, profitability, productivity, leverage and institutional ownership,
respectively, while high carbon represents the low/high carbon industries variable.
Moreover, we construct two additional models to assess the effect of foreign directors’ impact
on high (low) CE industries (Bui et al., 2020). These two models are intended to fill the gap in the
literature by providing further empirical evidence for the critical role played by foreign directors
in enhancing CD. This analysis aims to enhance our understanding through an in-depth
investigation of the role of foreign directors on CD while differentiating between firms based on
their CE class. We, thus, run the following random effects regression for high (low) CE industries:
CDt ¼ a0 þ b 1 DCPt þ b 2 foreign directorst þ b 3 gendert þ b 4 independencet
þ b 5 Board sizet þ b 6 board meetingst þ b 7 R&D intensityt þ b 8 liquidityt
þ b 9 sizet þ b 10 ROEt þ b 11 productiont þ b 12 leveraget
þb 13 institutional ownershipt þ b 14 Year þ « t (3)
Motivated by recent studies (Buchanan et al., 2018; Kim et al., 2020), our research also Impact of
examines the relationship between foreign directors and CD across firms with varying levels foreign
of institutional ownership. Following Buchanan et al. (2018), we classify our data set into
two distinct groups based on the institutional ownership level at the base year (2010) of our
directors
data set. Specifically, firms with high (low) institutional ownership are grouped as firms
with above (below) the sample’s institutional ownership median. Accordingly, we develop
the following random-effects model for firms with high (low) levels of institutional
ownership:

CDt ¼ a0 þ b 1 DCPt þ b 2 foreign directorst þ b 3 gendert þ b 4 independencet

þ b 5 Board sizet þ b 6 board meetingst þ b 7 R&D intensityt þ b 8 liquidityt
þ b 9 sizet þ b 10 ROEt þ b 11 productiont þ b 12 leveraget þ b 13 high carbont

þ b 14 Year þ « t (4)

Finally, increasing attention has been paid to the debate concerning progressing toward
low-carbon economies. The entire community has acknowledged major climate-change
challenges (Bui et al., 2020). In this context, the Paris Agreement (since it came into force in
2016) provides our paper with a further perspective, reflecting a growing institutional
pressure on French firms to decrease their CE. Specifically, it inspires our investigation of
the role played by foreign directors in determining CD before and after the Paris
Agreement’s effective adoption. Hence, we divide our data set into two sub-samples (before
and after enforcing the Paris Agreement in November 2016) and test the following random-
effects model:

CDt ¼ a0 þ b 1 DCPt þ b 2 foreign directorst þ b 3 gendert þ b 4 independencet

þ b 5 Board sizet þ b 6 board meetingst þ b 7 R&D intensityt þ b 8 liquidityt
þ b 9 sizet þ b 10 ROEt þ b 11 productiont þ b 12 leveraget

þb 13 institutional ownershipt þ b 14 high carbont þ b 15 Year þ « t (5)

4. Results
4.1 Descriptive and correlation statistics
This sub-section illustrates the descriptive statistics in Table 3. The mean value for the CDP
disclosure index for CD is 82.8% across the sample, which suggests that the SBF-120
French-listed firms are strongly committed to CE. This interesting value for CD leads us to
examine whether the awareness of CD demonstrates a specific trend from year to year;
Figure 2 shows a trend of increasing CD from 2010 to 2018, with a marked upturn in the
period 2015 to 2018. Depoers et al. (2016) reported a lower CD mean value of 79% between
2007 and 2009, showing that French firms are focused on increasing their CD over time.
However, Bui et al. (2020) found a higher trend for CD among US firms compared to our
sample of French listed firms; they reported mean values of 87.9% in 2015 and 83.02% in
2014. The relatively high CD reflects French firms’ commitment to responding to their
stakeholders’ requests for material climate data and accountability to reduce their CE due to
growing institutional and stakeholder pressure. For instance, the greater awareness of
climate change impacts, coupled with environmental regulations (Grenelle I and II laws), has
SAMPJ Variables Mean SD Minimum Maximum

CD 0.828 0.15 0.15 0.9

CP1 0.23 0.24 0.007 0.77
CP2 0.31 0.28 0.006 0.85
CP3 0.43 0.37 0 0.97
DCP 0.48 0.5 0 1
Foreign directors 0.25 0.22 0 1
Gender 0.28 0.11 0 0.54
Independence 0.52 0.18 0.08 1
Board size 13.28 2.66 8 20
Board meetings 8.6 2.43 2 20
R&D intensity 0.019 0.04 0 0.21
Liquidity 1.25 0.51 0.26 3.71
Firm size 9.56 1.13 7.66 11.54
ROE 0.1 0.16 0.89 1.02
productivity 0.74 0.35 0.02 2.42
Leverage 1.30 8.93 0 0.89
Table 3. Institutional 0.35 0.24 0.01 0.78
Descriptive statistics High-carbon 0.34 0.47 0 1

90
88
86
84
82
80
78
76
Figure 2. 74
CDP carbon 72
disclosure in % per 70
year (n = 67) 2010 2011 2012 2013 2014 2015 2016 2017 2018

led to greater demand for reporting environmental information, implementing the best
sustainability practices and ensuring better sustainability engagement with stakeholders
(Depoers et al., 2016). In terms of CP, the mean values for Scopes 1, 2 and 3 (CP1–3) are 23%,
31% and 43%, respectively, and these percentages indicate that the CDP reports consider
CP on Scope 3 (other emissions) rather than on Scope 1 (direct emissions) and Scope 2
(indirect emissions). We suggest that the main reason behind this high level of CD and the
acceptable rate of CP is the importance of environmental information from the firms’
stakeholders’ perspectives.
Moreover, the mean value of foreign directors is 25%, which leads us to conclude that the
existence of foreign directors is, on average, relatively high compared to English law
countries such as the USA (19%) (Iliev and Roth, 2018). However, we hypothesize that they
have a significant positive impact on CP and CD (Section 2) to provide further insights into
both the theoretical and practical dimensions of the carbon accounting literature.
 Table 3 also shows the descriptive statistics for further CG determinants. For instance, Impact of
the average board size varies from 8 to 20, with a mean value of 12 directors and an foreign
independent non-executive directors’ average of 52%. The number of meetings ranges from
two to 20 per year, with an average of eight meetings per year. In terms of company
directors
characteristics, some interesting figures reveal a high mean of leverage (130%) and
relatively high productivity and liquidity (74% and 125%, respectively).
In terms of the correlation among the variables of the current study, Table 4 shows that
the correlation between the CD and CP measure of Scope 2 is negatively and statistically
significant (p < 0.05). On the other hand, the CD is positively and statistically significant
(p < 0.05), with a number of CG determinants, e.g. foreign directors, gender diversity and
board size. The correlation among the current study’s variables is generally low.

4.2 Regression analysis

4.2.1 Carbon performance and foreign directors. Table 5 displays the regression results.
Models 1–4 [Equation (1)] relate CP proxies CP1, CP2, CP3 and DCP to foreign directors,
controlling for CG and company characteristics. In general, Models 1–4 show relatively high
explicatory power, with R2 values ranging from 31% to 84%. The results for foreign
directors exhibit a positive and statistically significant (p < 0.01) association with CP1, CP2
and CP3 in Models 1–3, thus providing support for H1, which assumes that diverse boards
with a higher proportion of foreign directors have a significant positive impact on CP. Our
results, thus, suggest that foreign directors’ views positively affect the decision-making
processes of the board, leading to an improvement in CP, which can be construed as a
reduction in CE intensity. This is coherent with Model 4’s results, which indicate that a
higher reliance on foreign directors is likely to decrease CE and thereby implement
decarbonization strategies related to climate change, which will enhance the CP of the firm
in the future (Haque, 2017; Ben-Amar et al., 2017). This finding supports H2, which predicts
a significant and positive association between foreign directors and a reduction in CE.
This consistency regarding the findings for foreign directors provides significant
insights that provoke a valuable discussion. From the resource dependence perspective, we
argue that foreign directors add value to the boardroom and contribute to creating a
sustainable culture. Specifically, this enhances our understanding that a higher rate of
foreign directors on the board brings diverse ideas, knowledge and views, which enhance a
firm’s capacity to take effective sustainability decisions (Ruigrok et al., 2007). Moreover, this
reflects firms’ choices to engage with sustainability issues, due to the increasing awareness
of foreign members in relation to addressing long-term CE challenges and legitimacy
threats. Our findings are coherent with prior studies that have investigated the effect of
directors on CP, concluding that better-governed firms tend to implement sound
sustainability practices (Post et al., 2011; Liao et al., 2015; Haque, 2017). For instance, Post
et al. (2011) asserted that boardrooms with a higher percentage of foreign directors are more
sensitive to environmental issues, which may be the reason behind the positive association
between the foreign directors and CP.
From a legitimacy theory perspective, it is plausible to assume that directors with diverse
nationalities and experiences take strategic CP decisions to defend the firm’s legitimacy and
reputation (Kiliç and Kuzey, 2019). Moreover, we believe that foreign directors use their
skills as a functional tool in aligning the agency problem through CP decisions to prevent
managers from serving their own interests above those of shareholders (Dam and Scholtens,
2013). Foreign directors are likely to support long-term sustainability investments, as they
believe that solving environmental issues by improving CP will be in shareholders’ long-
term interests. Hence, foreign directors are likely to strike a balance between the
 Table 4.
SAMPJ

Correlation matrix
Variables 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

1 CD 1
2 CP1 0.02 1
3 CP2 0.08* 0.02 1
4 CP3 0.07 0.65* 0.73* 1
5 DCP 0.08* 0.03 0.004 0.01 1
6 Foreign directors 0.21* 0.15* 0.07 0.04 0.03 1
7 Gender 0.22* 0.09* 0.05 0.1* 0.005 0.11* 1
8 Independence 0.05 0.01 0.17* 0.12* 0.006 0.06 0.1* 1
9 Board size 0.19* 0.14* 0.27* 0.1* 0.07 0.07 0.08* 0.28* 1
10 Board meetings 0.05 0.04 0.01 0.02 0.03 0.007 0.05 0.05 0.008 1
11 R&D intensity 0.18* 0.09* 0.005 0.07 0.04 0.07 0.002 0.04 0.22* 0.03 1
12 Liquidity 0.06 0.01 0.08* 0.06 0.01 0.06 0.06 0.02 0.17* 0.14* 0.32* 1
13 Firm size 0.3* 0.06 0.2* 0.12* 0.04 0.14* 0.05 0.04 0.45* 0.05 0.08* 0.25* 1
14 ROE 0.008 0.14* 0.02 0.09* 0.03 0.05 0.09* 0.04 0.09* 0.08* 0.04 0.03 0.04 1
15 Productivity 0.17* 0.07 0.07 0.003 0.01 0.07 0.12* 0.05 0.02 0.01 0.01 0.06 0.12* 0.09* 1
16 Leverage 0.01 0.04 0.04 0.03 0.04 0.04 0.05 0.01 0.009 0.14* 0.05 0.06 0.11* 0.04 0.12* 1
17 Institutional 0.08* 0.05 0.02 0.06 0.02 0.05 0.02 0.3* 0.06 0.04 0.09* 0.07 0.17* 0.06 0.06 0.01 1
18 High-carbon 0.04 0.21* 0.06 0.2* 0.03 0.12* 0.03 0.03 0.04 0.21* 0.05 0.04 0.12* 0.22* 0.05 0.09* 0.12* 1

Note: * Indicate significance at the 5% level

Variables and Model Information Model 1: CP1 Model 2: CP2 Model 3: CP 3 Model 4: DCP Model 5: CD
Impact of
foreign
Constant 1.52 1.57 1.25 2.6 0.67 directors
0.12 0.17 0.15 0.08* 0.22
Foreign directors 0.5 0.68 0.38 0.42 0.47
0.000*** 0.000*** 0.000*** 0.002*** 0.000***
Gender 0.68 0.06 0.89 0.68 0.05
0.150 0.890 0.220 0.140 0.790
Independence 0.87 0.46 0.39 0.16 0.52
0.042** 0.024** 0.45 0.82 0.00***
Board size 0.03 0.02 0.01 0.01 0.02
0.196 0.229 0.662 0.764 0.00***
Board meetings 0.87 0.007 0.008 0.06 0.0004
0.320 0.278 0.484 0.003*** 0.892
R&D intensity 0.8 0.59 0.21 0.06 0.35
0.203 0.000*** 0.654 0.462 0.523
Liquidity 0.09 0.25 0.14 0.28 0.003
0.452 0.007*** 0.401 0.335 0.910
Firm size 0.04 0.07 0.02 0.21 0.06
0.491 0.387 0.836 0.114 0.00***
ROE 0.11 0.22 0.002 0.68 0.17
0.421 0.124 0.957 0.126 0.118
Productivity 0.39 0.42 0.05 0.4 0.07
0.015** 0.007*** 0.061* 0.012** 0.025**
Leverage 1.59 1.06 0.96 0.59 0.04
0.00*** 0.00*** 0.001*** 0.530 0.801
Institutional 0.480 0.350 0.810 0.270 0.06
0.007*** 0.020** 0.004*** 0.270 0.260
High-carbon 0.02 0.01 0.03 0.01 0.005
0.324 0.781 0.413 0.951 0.750
Adjusted R2 0.8 0.84 0.77 0.31 0.72
Hypothesis status Accepted Accepted Accepted Accepted Accepted
Year effect Yes Yes Yes Yes Yes
Hausman test (prob > chi2) 20.6 (0.47) 20.88 (0.46) 20.05 (0.51) 19.62 (0.54) 20.72 (0.41)
Breusch and Pagan Lagrangian 937.6 (0.00) 934.04 (0.00) 933.9 (0.00) 921.4 (0.00) 936.07 (0.00)
multiplier test (prob > chibar2) Table 5.
CP, CD and foreign
Notes: p-values are in italic; *, ** and *** denotes significance at the 10, 5 and 1% level, respectively directors results

maximization of shareholder value and responding to stakeholders’ needs by promoting CP

accountability. Indeed, foreign directors, typically characterized by diverse skills, networks
and perspectives, seem to influence the board’s decisions toward intensifying the firm’s
environmental engagements and supporting strategies that undertake effective climate-
change activities (El-Bassiouny and El-Bassiouny, 2019).
Moreover, our findings for the DCP variable (Model 4) confirm that boards with a higher
proportion of foreign directors are stakeholder-oriented as they support CE reduction
decisions (García-Blandìn et al., 2019). This implies significant financial, human and
technological capital, along with a long-term commitment, without producing immediate
profits (Luo et al., 2013). In this context, Iliev and Roth (2018) pointed out that firms gain
benefits and learning experience from a board comprising foreign directors. Interestingly,
this learning effect is stronger in countries with a non-English legal origin (Iliev and Roth,
2018). We believe that our findings provide an interesting insight, aligned with Iliev and
Roth’s (2018) argument, as France has a civil law system, which has a direct bearing on CG
SAMPJ mechanisms such as foreign directors. In other words, we believe that the positive
significant impact of foreign directors on CP may not only be related to the foreign directors’
experiences and expertise but also France’s non-English civil law system.
In terms of CG variables, our study finds that foreign directors, coupled with board
independence, drive better CP. This finding suggests that a higher number of independent
directors on a board enhances the firm’s CP, which is in line with legitimacy theory’s views
on the roles that independent directors play in monitoring and implementing environmental
strategies in relation to shareholders’ interests (Haque, 2017).
4.2.2 Carbon disclosure and foreign directors. This sub-section discusses the results of
Model 5 [Equation (2)], which addresses the study objective regarding foreign directors’
impact on the extent of CD. Table 5 shows the regression results, indicating that foreign
directors exhibit a positive and significant (p < 0.01) association with CD, thereby
supporting H3, which predicts that foreign directors have a significant positive impact on
the level of CD. Our findings are coherent with prior research from a resource dependence
perspective showing that having foreign directors on the board represents a beneficial
heterogeneous resource (Post et al., 2011; Baker et al., 2020; Khatib et al., 2020) that
encourages more environmental disclosure. Nationality-diverse boards are more sensitive to
greater stakeholder demands for information. One way to address the increased demand for
environmental information and greater agency problems is the development of a
communication channel encompassing qualitative environmental disclosure. Our study
confirms the agency arguments that diverse boards with a high proportion of foreign
directors are likely to increase the extent of CD to decrease information asymmetry (Guthrie
and Parker, 1990). From a legitimacy theory perspective, this reflects foreign directors’
engagement in supporting corporate legitimacy by providing material CD information to
satisfy stakeholders’ needs for greater environmental transparency. Thus, we believe that
foreign directors are more concerned with CD, reflecting their sustainability involvement.
Specifically, in line with prior studies, foreign directors have several incentives for revealing
relevant information about the impact of their sustainability-related activities (Luo et al.,
2012). Grounded on legitimacy theory, foreign directors may use CD as a communication
tool with which to counter potential legitimacy threats (Vesty et al., 2015; Ortiz-de-
Mandojana et al., 2016; Li et al., 2016; Ben-Amar et al., 2017; Qian and Schaltegger, 2017;
Kiliç and Kuzey, 2019). Through greater disclosure, foreign directors aim to support greater
transparency, highlighting their collective efforts to address carbon issues and
environmental activities. Moreover, Vesty et al. (2015) found that foreign board directors
support higher CD because CE figures are important for asset valuation for long-term
investment projects. From the agency theory perspective, foreign directors are more likely to
fulfill the monitoring role to reduce the agency problem and to provide information to a
broader range of stakeholders to enable the effective assessment of risks arising from
carbon metrics, future valuation and better capital allocation (Bushman and Smith, 2001;
Ntim and Soobaroyen, 2013). In other words, a board with strategic foreign directors may
avoid agency problems and enhance the extent of the CD among SBF-120 non-financial
French-listed firms, as reported in the CDP reports.
Prior CD literature has posited that the extent of CD published in the CDP reports reflects
boardroom and management efforts to communicate their sustainability performance to
make them accountable, as a response to the growing societal awareness of sustainability
concerns (Vesty et al., 2015; Ben-Amar et al., 2017). The above argument suggests that more
stringent climate-change regulations should encourage corporate boards to voluntarily
disclose more information about the firm’s environmental performance. Moreover, the
literature related to the level of corporate disclosure has suggested that legal factors should
determine the extent of disclosure voluntarily (Hope, 2003). Our evidence is in line with Impact of
Masulis et al. (2012), suggesting that, with the globalization of their activities a greater foreign
demand for information emerges and leading to greater information asymmetry problems.
Our findings are coherent with the arguments suggesting that civil law countries are likely
directors
to disseminate larger amounts of information to satisfy stakeholders’ needs compared to
English common law countries that require typical shareholder-oriented corporate annual
reports (Ball et al., 2000).
In terms of CG variables, our study finds that foreign directors and independence
determine the extent of CD reported in the CDP reports. Legitimacy literature has argued
that a firm’s survival depends on its legitimation processes in managing pressures and
challenges such as environmental ones (i.e. CD) (Cowan and Deegan, 2011; Michelon and
Parbonetti, 2012). In accordance with legitimacy arguments, larger firms tend to disclose
more carbon information about their carbon activities because they are subject to societal
pressure from stakeholders such as investors (Ortiz-de-Mandojana et al., 2016).
4.2.3 High/low carbon emission industries and foreign directors. We distinguish between
firms with varying degrees of CE, with firms with higher (lower) CE intensity, categorized
as high (low) carbon industries (Qian and Schaltegger, 2017). Table 6 reports the findings of
equation (3) for high (low) CE sub-samples (Model 6 and 7). Specifically, Model 6 shows the
results of low-carbon industries, while Model 7 displays those for high-carbon industries [5].
Both models show that foreign directors have a positive and significant impact on the extent
of CD. However, the positive effect of foreign directors on CD in low-carbon industries is
significant at the 5% level, compared to a significance level of 10% in high-carbon
industries. This suggests that foreign directors play a more pronounced role in low-carbon
industries. Our evidence confirms the effectiveness of foreign board members with a broad
array of expertise, experience and insights in promoting sustainability disclosure (Ortiz-de-
Mandojana et al., 2016). Our findings underscore the role of foreign directors, who tend to
assure the convergence of diverse objectives (i.e. the maximization of shareholder value,
defending corporate legitimacy and reducing agency problems) related to the firm’s
environmental activities, of which one is the extent of CD reporting (Liao et al., 2015). In
particular, foreign directors in low CE industries seem to support greater transparency and
greater CD. Given the importance of legitimacy threats (Michelon and Parbonetti, 2012), the
effect of foreign directors in high CE industries is attenuated, as these firms may customize
and select their environmental information to legitimate their public image (Qian and
Schaltegger, 2017).
4.2.4 Carbon disclosure, foreign directors and institutional ownership. Models 8 and 9 in
Table 6 display the results of equation (4) across firms with varying levels of institutional
ownership [6]. Our findings show that the presence of foreign directors in the boardroom
positively affects the extent of CD. However, their effect is significantly higher (weaker) for
firms with higher (lower) institutional ownership. Our evidence suggests that the inclusion
of foreign directors in the boardroom contributes to higher CD and transparency levels in
firms with high institutional ownership. Foreign directors are likely to be more committed to
greater transparency when institutional investors play an effective monitoring role and
contribute to decreasing agency problems (Buchanan et al., 2018). Agency theory provides a
convincing rationale behind foreign directors’ sensitivity to the environmental information
demands of stakeholders such as institutional investors. Our evidence is coherent with the
logic behind Article 173-VI of France’s Law on Energy Transition for Green Growth that
mobilizes institutional investors in addressing the climate-change challenge. Our findings
are in line with those of Kim et al. (2020), who suggested that dedicated institutional
 Table 6.

disclosure
SAMPJ

Drivers of carbon
Carbon industries Institutional ownership Global climate change agreement
Variables and model information Model 6: low Model 7: high Model 8: low Model 9: high Model 10: before Model 11: after

Constant 1.16 0.37 0.66 0.73 0.78 0.8

0.18 0.07* 0.03** 0.02** 0.07* 0.16
DCP 0.03 0.005 0.007 0.02 0.005 0.01
0.341 0.51 0.32 0.37 0.51 0.28
Foreign directors 0.33 0.12 0.34 0.41 0.46 0.33
0.042** 0.081* 0.04** 0.03** 0.001*** 0.008***
Gender 0.22 0.02 0.03 0.01 0.18 0.02
0.536 0.647 0.69 0.92 0.03** 0.9
Independence 0.58 0.37 0.21 0.46 0.46 0.47
0.009*** 0.006*** 0.001*** 0.001*** 0.001*** 0.001***
Board size 0.04 0.006 0.01 0.01 0.01 0.004
0.023** 0.415 0.03** 0.02** 0.04** 0.001***
Board meetings 0.009 0.001 0.001 0.003 0.0009 0.004
0.367 0.41 0.54 0.41 0.74 0.22
R&D intensity 0.23 0.75 0.33 0.71 0.89 1.25
0.848 0.021** 0.41 0.42 0.12 0.006***
Liquidity 0.03 0.02 0.007 0.04 0.03 0.03
0.56 0.12 0.82 0.07* 0.07* 0.08*
Firm size 0.05 0.03 0.03 0.02 0.05 0.08
0.243 0.00*** 0.001*** 0.12 0.02** 0.001***
ROE 0.16 0.11 0.17 0.06 0.02 0.03
0.32 0.060* 0.02** 0.19 0.56 0.011**
Productivity 0.02 0.06 0.02 0.02 0.05 0.007
0.781 0.022** 0.57 0.57 0.04** 0.07*
Leverage 0.02 0.002 0.24 0.002 0.03 0.01
0.931 0.15 0.14 0.015** 0.08* 0.09*
Institutional 0.01 0.002 0.09 0.11
0.891 0.911 0.12 0.08*
High-carbon 0.02 0.39 0.003 0.004
0.79 0.14 0.88 0.9
2
Adjusted R 0.75 0.21 0.368 0.335 0.71 0.81
Number of observations 396 207 382 221 469 134
Hausman test (prob > chi2) 4.59 (0.9) 4.61 (0.8) 13.92 (0.87) 11.28 (0.74) 4.61 (0.49) 4.61 (0.53)
Breusch and Pagan LM test (prob > chibar2) 872.08 (0.00) 863.06 (0.00) 951.15 (0.00) 973.6 (0.00) 980.3 (0.00) 902.56 (0.00)

Notes: Year effect considered in all models. p-values are in italic. *, ** and *** denotes significance at the 10, 5 and 1% level, respectively
shareholders with long-term horizons encourage better environmental performance and Impact of
shape environmental disclosure policies. foreign
4.2.5 Carbon disclosure, foreign directors and the Paris agreement. Table 6 reports the
findings of equation (5) for the analysis before and after the Paris Agreement (Models 10 and
directors
11) [7]. Interestingly, Model 10 exhibits a higher foreign directors’ coefficient, suggesting
that a higher percentage of foreign directors in the boardroom encouraged higher CD levels
and greater transparency before the Paris Agreement came into effect, while Model 11
shows that the role of foreign directors was less noticeable after the agreement. A plausible
explanation is that, due to greater stakeholder and institutional pressure, corporate-
sustainability policies in large visible firms have pledged to comply with the national
transition to low-carbon industries and to meet ambitious carbon-neutrality commitments
(Milne et al., 2009; Haque, 2017; Qian and Schaltegger, 2017), particularly in France (Depoers
et al., 2016). Legitimacy and agency concerns that arise from rising stakeholder awareness
and pressure, coupled with increasing institutional pressure, motivate firms’ intensive
investments and actions to reduce their carbon emissions and encourage switching to
renewable energy (Qian and Schaltegger, 2017).
4.2.6 Endogeneity tests. We checked the consistency of our estimates by addressing
endogeneity concerns. Probably, the causal relationships between foreign directors, DCP
and CD may lead to uninterpretable results due to the effect of statistical bias, namely,
reverse causality or omitted-variable bias (Wooldridge, 2010). Omitted-variable bias arises if
the foreign directors variable is related to significant unobserved factors (i.e. board ethnicity
and educational background), which are ignored in the estimated regressions. We expect the
foreign director variable to be endogenously related to our dependent variables: DCP or CD.
Our analysis uses the two-stage least squares (2SLS) instrumental variable approach. The
identification of valid instruments to address endogeneity problems in empirical studies is
challenging (Zaid et al., 2020). Instruments for foreign directors involve directors’ stability
and multi-directorship. Foreign members’ stability is a dummy variable, equal to 1 if the
director has served for at least three years on the boardroom, otherwise 0. Multi-directorship
corresponds to the number of foreign members with multiple directorships serving in more
than three corporate boardrooms, scaled by the total number of foreign directors. We argue
that foreign directors with higher stability and multiple directorships offer better
perspectives due to their rich experience and varied networks (Baker et al., 2020). The 2SLS
instrumental variable results (Table 7) [8] confirm our main results (Tables 5 and 6) and
further support the role of foreign directors in driving CP and CD in the French context.

5. Conclusions
In this study, we examine the impact of foreign directors on CP and the extent of CD
provided in the CDP reports of SBF-120 non-financial French listed firms, with a target
period of nine years (2010 to 2018). Our findings underscore the influential role of foreign
board members in determining the CP and the extent of CD. In terms of CP, our findings
suggest that foreign directors are likely to decrease CE and enhance CP practices,
supporting the implementation of decarbonization strategies. Moreover, our findings
advocate that foreign directors increase the level of CD reported by non-financial French-
listed firms. Our findings resonate with the legitimacy theory arguments that motivate
foreign directors to report more extensively on both CE aspects (CP and CD) by addressing
stakeholders’ demands and responding to social expectations related to climate-change
activities. We also believe that foreign directors use CD as a legitimizing tool to enhance the
firm’s environmental image (Qian and Schaltegger, 2017). Our findings are coherent with
prior research suggesting that foreign directors on the board represent an underlying
SAMPJ First stage Second stage
Variables and model information Foreign directors CD DCP

Constant 0.87 0.74 0.52

0.26 0.13 0.16
Foreign directors 0.23 0.96
0.04** 0.04**
Foreign multi-directorship 0.47
0.03**
Foreign directors’ stability 0.33
0.04**
Centered R2 0.86 0.360 0.367
High carbon industry/year effect Yes Yes Yes
Weak identification test – Cragg-Donald Wald F statistic 30.56 30.54
Overidentification test – Hansen J statistic 0.63 0.03
Table 7. Hansen J statistic – p-value 0.42 0.85
Instrumental Notes: Control variables are included in the estimated regressions. The coefficients of the control variables
variable (2SLS) confirm that our main results do not suffer from endogeneity issues; for the sake of brevity, however, these
results coefficients are not reported here. p-values are in italic. ** denotes significance at 5% level, respectively

resource diversity that supports higher CD. In line with agency theory arguments, we
conclude that foreign directors can encourage managers to undertake CE reduction
initiatives, which, in turn, enhances the process-oriented CP, reduces asymmetry in relation
to the CD reported and reduces the potential consequences of agency problems (Zaid et al.,
2020).
Our findings also suggest that foreign directors’ incentives to reveal relevant
sustainability information are based on the detrimental impact for carbon polluters. Foreign
directors of low-carbon firms support corporate legitimacy by enhancing environmental
transparency and lowering information asymmetry. They tend to assure the convergence of
diverse objectives (i.e. the maximization of shareholder value, decreasing agency conflicts
and defending corporate legitimacy). When distinguishing between firms with varying
levels of institutional ownership, further analysis suggests that boards with a higher
proportion of foreign directors support higher CD and higher transparency levels in firms
led by high institutional ownership. However, the role of foreign directors is less pronounced
after Paris Agreement, which came into force in November 2016. A plausible explanation is
that after the Paris Agreement, increasing legitimacy concerns arising from rising
stakeholders’ awareness and pressure, coupled with increasing institutional pressure,
pushed firms to intensively invest in sustainability to meet ambitious carbon-neutrality
commitments.
This study has several practical and social implications. First, our study sheds light on
the foreign directors’ aspect, identifying it as one of the main pillars of a carbon model that is
used to sustain carbon activities. Specifically, we believe that foreign directors in the
boardroom represent a beneficial heterogeneous resource that plays a vital role in listed
firms’ carbon-related activities such as initiating carbon plans and implementing
sustainability strategies, to decrease the CE that arises from the firm’s activities (Ben-Amar
et al., 2017). Second, our research underscores the role of foreign directors in affecting CE
strategies. Foreign directors encourage implementing effective CE reduction strategies to
reduce, for example, energy consumption and to allocate efforts and resources to develop
renewable forms of energy. Implementing such strategies will be beneficial for firms in Impact of
terms of lowering manufacturing costs and increasing financial performance. foreign
Improving carbon metrics, which was perceived in the past as an additional cost,
directors
should be equivalent to competitive advantages, particularly for firms with
international activities, operating in a highly competitive environment. By developing
products with lower CE (i.e. electric vehicles), Renault Group, for example, which
belongs to the high-carbon impact industry, gained significant competitive advantages
in the international market. Therefore, reducing carbon footprint metrics has to be a
priority for French firms to ensure their competitiveness and respond to greater global
societal awareness about environmental issues. Specifically, we argue that
environmentally oriented foreign directors are likely to help their firms gain significant
competitive advantages in international markets due to their international experience
and skills. Thus, we believe that both CE aspects (CP and CD) are not just survival
tools; they also play a significant role in reducing costs, gaining competitive
advantages and enhancing a firm’s value, thus improving financial performance.
Third, our findings enhance awareness among shareholders, encouraging them to pay
more attention when selecting new board nominees to their firm’s carbon activities, which
may critical implications for their decision-making needs. By supporting the nomination of a
higher proportion of foreign directors, shareholders can ensure lower agency conflicts and
higher accountability (Haque, 2017). Via higher transparency, foreign directors help
shareholders to better assess environmental risks arising from carbon indicators, future firm
valuation and, therefore, better capital allocation. In particular, management may consider
balancing between foreign and local directors to maintain the benefits of a rich
heterogeneous resource encompassing the diverse merits of both types of directors, due to
their international experience.
Fourth, given the greater stakeholder and institutional orientation to meet ambitious
carbon-neutrality commitments, policymakers and regulators need to consider the
benefits of appointing foreign directors to listed firms’ corporate boards. Moreover, our
findings may offer insights for the French Stock Exchange on the sustainable
environmental performance of SBF-120 non-financial French listed firms by
highlighting the minimum level of CP and CD information required in reporting to
support stakeholders’ decision-making needs.
Finally, in relation to increasing societal awareness and institutional pressure following
the Paris Agreement, foreign directors seem to influence the board’s decisions toward
intensifying the firm’s carbon-reduction engagements and supporting strategies to meet
ambitious carbon-neutrality commitments. Consequently, we believe that non-financial
French firms should prioritize their operations’ CE aspects to ensure global competitiveness
and respond to higher global societal awareness of environmental issues.
However, this study has some limitations. First, although the CDP is a well-known global
organization, considered to provide a valid and clear-cut measurement of carbon activities,
several environmental indices (i.e. environmental, social and governance, global
environmental reporting initiatives) are not included in the current study. Future research
may consider the impact of foreign directors on environmental practices using a different
index. Second, our study uses a quantitative empirical approach; qualitative studies might
be conducted in the future to investigate in-depth the connection between foreign directors
(based on nationality) and carbon accounting. Specifically, future studies may use semi-
structured interviews and case-study methods among French-listed firms to further assess
the impact of foreign directors on environmental practices.
SAMPJ Notes
1. CP information is measured using the three scopes (in percentage terms): all direct emissions
(Scope 1); indirect emissions (Scope 2) and all other indirect emissions (Scope 3) (Hoffmann and
Busch, 2008; CDP, 2020). CD data are measured as a percentage, in accordance with the
disclosure index approach developed by the CDP that covers many aspects, including carbon-
control mechanisms, carbon strategies, carbon initiatives, carbon risks and opportunities and
carbon engagement (CDP, 2020).
2. The European Union’s official website shows details of the Paris Agreement: https://ec.europa.eu/
clima/policies/international/negotiations/paris_en
3. The CDP developed a questionnaire including a disclosure index to measure the CD in percentage
terms that contains many aspects of CE such as the climate risks, challenges and opportunities
that a firm may face due to climate change (CDP, 2020).
4. According to the Thomson Reuters database, our sampled firms represent 80.33% (e1.47bn) of
the total market capitalization of the overall SBF-120 index in 2018 (e1.84bn).
5. We consider two sub-samples based on CE industry classification: low-carbon industries (44 of
67 firms) and high-carbon industries (23 of 67 firms). We, thus, run the analysis on 396 and 207
observations, respectively, for the two categories.
6. Following Buchanan et al. (2018), we classify our data set into two sub-samples (high/low) based
on the sample’s institutional ownership median.
7. We consider two sub-samples: before and after the Paris Agreement came into effect in
November 2016.
8. We assess the validity of our instruments based on the weak identification test (F statistic) and
the overidentification test (Hansen J statistic). The Hansen J statistics (p > 0.05) justify
overidentification restrictions in the sense that our set of instrumental variables is valid with zero
correlations with error terms. Interestingly, weak identification statistics suggest that our
estimates are not biased, as the Cragg–Donald Wald F statistics exceed the Stock–Yogo critical
values.

References
Archibald, M.E. (2007), Encyclopedia of Governance, 1st ed., SAGE Publications.
Baker, H.K., Pandey, N., Kumar, S. and Haldar, A. (2020), “A bibliometric analysis of board diversity:
current status, development, and future research directions”, Journal of Business Research,
Vol. 108, pp. 232-246.
Ball, R., Kothari, S.P. and Robin, A. (2000), “The effect of international institutional factors on properties
of accounting earnings”, Journal of Accounting and Economics, Vol. 29 No. 1, pp. 1-51.
Ben-Amar, W., Chang, M. and McIlkenny, P. (2017), “Board gender diversity and corporate response to
sustainability initiatives: evidence from the carbon disclosure project”, Journal of Business
Ethics, Vol. 142 No. 2, pp. 69-383.
Biermann, R. and Harsch, M. (2017), “Resource dependence theory”, Palgrave Handbook of Inter-
Organizational Relations in World Politics, Palgrave Macmillan, London.
Branco, M.C. and Rodrigues, L.L. (2008), “Factors influencing social responsibility disclosure by
Portuguese companies”, Journal of Business Ethics, Vol. 83 No. 4, pp. 685-701.
Brick, I.B., Palmon, O. and Wald, J.K. (2006), “CEO compensation, director compensation and firm
performance: evidence of cronyism”, Journal of Corporate Finance, Vol. 12 No. 3, pp. 403-404.
Buchanan, B., Cao, C.X. and Chen, C. (2018), “Corporate social responsibility, firm value, and influential
institutional ownership”, Journal of Corporate Finance, Vol. 52, pp. 73-95.
Bui, B., Houqe, M. and Zaman, M. (2020), “Climate governance effects on carbon disclosure and Impact of
performance”, The British Accounting Review, Vol. 52 No. 2, pp. 1-16.
foreign
Busch, T. and Hoffman, V.H. (2011), “How hot is your bottom line? Linking carbon and financial
performance”, Business and Society, Vol. 50 No. 2, pp. 233-265.
directors
Bushman, R.M. and Smith, A.J. (2001), “Financial accounting information and corporate governance”,
Journal of Accounting and Economics, Vol. 32 Nos 1/3, pp. 237-333.
Carbon Disclosure Project (CDP) (2020), available at: www.cdp.net/en (accessed 10 August 2020).
Cho, C.H. and Patten, D.M. (2007), “The role of environmental disclosures as tools of legitimacy: a
research note”, Accounting, Organizations and Society, Vol. 32 Nos 7/8, pp. 639-647.
Cowan, S. and Deegan, C. (2011), “Corporate disclosure reactions to Australia’s first national emission
reporting scheme”, Accounting and Finance, Vol. 51 No. 2, pp. 409-436.
Dam, L. and Scholtens, B. (2013), “Ownership concentration and CSR policy of European multinational
enterprises”, Journal of Business Ethics, Vol. 118 No. 1, pp. 117-126.
Davis, G.F. and Cobb, A.J. (2010), “Resource dependence theory: past and future”, Research in the
Sociology of Organizations, Vol. 28 No. 1, pp. 21-42.
Depoers, F., Jeanjean, T. and Jérôme, T. (2016), “Voluntary disclosure of greenhouse gas emissions:
contrasting the carbon disclosure project and corporate reports”, Journal of Business Ethics,
Vol. 134 No. 3, pp. 445-461.
Doda, B., Gennaioli, C., Gouldson, A., Grover, D. and Sullivan, R. (2016), “Are corporate carbon
management practices reducing corporate carbon emissions?”, Corporate Social Responsibility
and Environmental Management, Vol. 23 No. 5, pp. 257-270.
Dowling, J. and Pfeffer, J. (1975), “Organizational legitimacy: social valued and organizational
behavior”, The Pacific Sociological Review, Vol. 18 No. 1, pp. 122-136.
Eisenhardt, K.M. (1989), “Agency theory: an assessment and review”, Academy of Management Review,
Vol. 14 No. 1, pp. 57-74.
El-Bassiouny, D. and El-Bassiouny, N. (2019), “Diversity, corporate governance and CSR
reporting: a comparative analysis between top-listed firms in Egypt, Germany and the
USA”, Management of Environmental Quality: An International Journal, Vol. 30 No. 1,
pp. 116-136.
El-Kassar, A., Messarra, L.C. and Elgammal, W. (2015), “Effects of ethical practices on corporate
governance in developing countries: evidence from Lebanon and Egypt”, Corporate Ownership
and Control, Vol. 12 No. 3, pp. 494-504.
Elsayih, J.O. (2015), “Corporate governance and carbon performance and disclosure: Australian
experience”, available at: http://researchdirect.uws.edu.au/islandora/object/uws%3A36425
Elsayih, J., Tang, Q. and Lan, Y.C. (2018), “Corporate governance and carbon transparency: Australian
experience”, Accounting Research Journal, Vol. 31 No. 3, pp. 405-422.
Fama, E.F. and Jensen, M.C. (1983), “Separation of ownership and control”, Journal of Law and
Economics, Vol. 26 No. 2, pp. 163-188.
Galbreath, J. (2009), “Corporate governance practices that address climate change: an exploratory
study”, Business Strategy and the Environment, Vol. 19 No. 5, pp. 335-350.
García-Blandìn, J., Argilés-Bosch, J.M. and Ravenda, D. (2019), “Exploring the relationship between
CEO characteristics and performance”, Journal of Business Economics and Management, Vol. 20
No. 6, pp. 1064-1082.
Garcia-Meca, E. and Sanchez-Ballesta, J.P. (2010), “The association of board independence and
ownership concentration with voluntary disclosure: a meta-analysis”, European Accounting
Review, Vol. 19 No. 3, pp. 603-627.
Guthrie, J. and Parker, L.D. (1990), “Corporate social disclosure practice: a comparative international
analysis”, Advances in Public Interest Accounting, Vol. 3, pp. 159-175.
SAMPJ Haque, F. (2017), “The effects of board characteristics and sustainable compensation policy on carbon
performance of UK firms”, The British Accounting Review, Vol. 49 No. 3, pp. 347-364.
Haque, S. and Deegan, C. (2011), “Corporate climate change-related governance practices and
related disclosures: evidence from Australia”, Australian Accounting Review, Vol. 20 No. 4,
pp. 317-333.
Hillman, A.J. and Dalziel, T. (2003), “Boards of directors and firm performance: integrating agency
and resource dependence perspectives”, Academy of Management Review, Vol. 28 No. 3,
pp. 383-396.
Hillman, A.J., Withers, M.C. and Collins, B.J. (2009), “Resource dependence theory: a review”, Journal of
Management, Vol. 35 No. 6, pp. 1404-1427.
Hoffmann, V.H. and Busch, T. (2008), “Corporate carbon performance indicators”, Journal of Industrial
Ecology, Vol. 12 No. 4, pp. 505-520.
Hope, O.K. (2003), “Disclosure practices, enforcement of accounting standards, and analysts’
forecast accuracy: an international study”, Journal of Accounting Research, Vol. 41 No. 2,
pp. 235-272.
Iliev, P. and Roth, L. (2018), “Learning from directors’ foreign board experiences”, Journal of Corporate
Finance, Vol. 51, pp. 1-19.
Kao, M.F., Hodgkinson, L. and Jaafar, A. (2018), “Ownership structure, the board of directors and firm
performance: evidence from Taiwan”, Corporate Governance: The International Journal of
Business in Society, Vol. 19 No. 1, pp. 189-216.
Khatib, S.F.A., Abdullah, D.F., Elamer, A.A. and Abueid, R. (2020), “Nudging toward diversity in the
boardroom: a systematic literature review of board diversity of financial institutions”, Business
Strategy and the Environment, Vol. 30 No. 2, pp. 985-1002.
Kiliç, M. and Kuzey, C. (2019), “The effect of corporate governance on carbon emission
disclosures”, International Journal of Climate Change Strategies and Management, Vol. 11
No. 1, pp. 35-53.
Kim, I., Ryou, J.W. and Yang, R. (2020), “The color of shareholders’ money: institutional shareholders’
political values and corporate environmental disclosure”, Journal of Corporate Finance, Vol. 64,
p. 101704.
Lee, S.Y. (2012), “Corporate carbon strategies in responding to climate change”, Business Strategy and
the Environment, Vol. 21 No. 1, pp. 33-48.
Li, D., Huang, M., Ren, S., Chen, X. and Ning, L. (2016), “Environmental legitimacy, green innovation,
and corporate carbon disclosure: evidence from CDP China 100”, Journal of Business Ethics,
Vol. 150 No. 4, pp. 1089-1104.
Liao, L., Luo, L. and Tang, Q. (2015), “Gender diversity, board diversity, environmental
committee and greenhouse gas disclosure”, The British Accounting Review, Vol. 47 No. 4,
pp. 409-424.
Luo, L. and Tang, Q. (2014), “Does voluntary carbon disclosure reflect underlying carbon performance”,
Journal of Contemporary Accounting and Economics, Vol. 10 No. 3, pp. 191-205.
Luo, L., Lan, Y.C. and Tang, Q. (2012), “Corporate incentives to disclose carbon information: evidence
from the CDP global 500 report”, Journal of International Financial Management and
Accounting, Vol. 23 No. 2, pp. 93-120.
Luo, L., Tang, Q. and Lan, Y.C. (2013), “Comparison of propensity for carbon disclosure between
developing and developed countries: a resource constraint perspective”, Accounting Research
Journal, Vol. 26 No. 1, pp. 6-34.
Mahadeo, J.D., Oogarah-Hanuman, V. and Soobaroyen, T. (2011), “Changes in social and environmental
reporting practices in an emerging economy (2004-2007): exploring the relevance of stakeholder
and legitimacy theories”, Accounting Forum, Vol. 35 No. 3, pp. 158-175.
Masulis, R.W., Wang, C. and Xie, F. (2012), “Globalizing the boardroom-The effects of foreign directors Impact of
on corporate governance and firm performance”, Journal of Accounting and Economics, Vol. 53
No. 3, pp. 527-554. foreign
Michelon, G. and Parbonetti, A. (2012), “The effect of corporate governance on sustainability directors
disclosure”, Journal of Management and Governance, Vol. 16 No. 3, pp. 477-509.
Milne, M., Tregidga, H. and Walton, S. (2009), “Words not actions! the ideological role of sustainable
development reporting”, Accounting, Auditing and Accountability Journal, Vol. 22 No. 8,
pp. 1211-1257.
Ntim, C.G. and Soobaroyen, T. (2013), “Black economic empowerment disclosures by South African
listed corporations: the influence of ownership and board characteristics”, Journal of Business
Ethics, Vol. 116 No. 1, pp. 121-138.
Ortiz-de-Mandojana, N., Aguilera-Caracuel, J. and Morales-Raya, M. (2016), “Corporate
governance and environmental sustainability: the moderating role of the national
institutional context”, Corporate Social Responsibility and Environmental Management,
Vol. 23 No. 3, pp. 150-164.
Patten, D. (1992), “Intra-industry environmental disclosures in response to the Alaskan oil spill: a note
on legitimacy theory”, Accounting, Organizations and Society, Vol. 17 No. 5, pp. 471-475.
Patten, D. (2002), “The relation between environmental performance and environmental disclosure: a
research note”, Accounting, Organizations and Society, Vol. 27 No. 8, pp. 763-773.
Patten, D. (2015), “An insider’s reflection on quantitative research in the social and environmental
disclosure domain”, Critical Perspectives on Accounting, Vol. 32, pp. 45-50.
Post, C., Rahman, N. and Rubow, E. (2011), “Green governance: board of directors’ composition
and environmental corporate social responsibility”, Business and Society, Vol. 50 No. 1,
pp. 189-223.
Prado-Lorenzo, J.M. and Garcia-Sanchez, I.M. (2010), “The role of the board of directors in
disseminating relevant information on greenhouse gases”, Journal of Business Ethics, Vol. 97
No. 3, pp. 391-424.
Qian, W. and Schaltegger, S. (2017), “Revisiting carbon disclosure and performance: legitimacy and
management views”, The British Accounting Review, Vol. 49 No. 4, pp. 365-379.
Rankin, M., Windsor, C. and Wahyuni, D. (2011), “An investigation of voluntary corporate greenhouse
gas emissions reporting in a market governance system: Australian evidence”, Accounting,
Auditing and Accountability Journal, Vol. 24 No. 8, pp. 1037-1070.
Ruigrok, W., Peck, S. and Tacheva, S. (2007), “Nationality and gender diversity on Swiss corporate
boards”, Corporate Governance: An International Review, Vol. 15 No. 4, pp. 546-557.
Song, H.J., Yoon, Y.N. and Kang, K.H. (2020), “The relationship between board diversity and firm
performance in the lodging industry: the moderating role of internationalization”, International
Journal of Hospitality Management, Vol. 86, p. 102461.
Soobaroyen, T. and Ntim, C.G. (2013), “Social and environmental accounting as symbolic and
substantive means of legitimation: the case of HIV/AIDS reporting in South Africa”, Accounting
Forum, Vol. 37 No. 2, pp. 92-109.
Vesty, G., Telgenkamp, A. and Roscoe, P. (2015), “Creating numbers: carbon and capital investment”,
Accounting, Auditing and Accountability Journal, Vol. 28 No. 3, pp. 302-324.
Wooldridge, J.M. (2010), Econometric Analysis of Cross Section and Panel Data, The MIT Press,
Cambridge, MA; London.
Yousf, A., Zakaria, A.A. and Thankom, A. (2018), “Earnings management and corporate social responsibility:
UK evidence”, Journal of Financial Reporting and Accounting, Vol. 16 No. 2, pp. 311-332.
Zaid, M.A.A., Wang, M., Adib, M., Sahyouni, A. and Abuhijleh, S.T.F. (2020), “Board nationality and
gender diversity: implications for corporate sustainability performance”, Journal of Cleaner
Production, Vol. 251, pp. 119-652.
SAMPJ Further reading
Deegan, C. (2002), “The legitimizing effect of social and environmental disclosures - a
theoretical foundation”, Accounting, Auditing and Accountability Journal, Vol. 15 No. 3,
pp. 282-311.
Suchman, M.C. (1995), “Managing legitimacy: strategies and institutional approaches”, Academy of
Management Review, Vol. 20 No. 3, pp. 571-610.
Yu, E., Luu, B. and Chen, C. (2020), “Greenwashing in environmental, social and governance
disclosures”, Research in International Business and Finance, Vol. 52, p. 101192.

Corresponding author
Ghassan H. Mardini can be contacted at: ghassan.mardini@qu.edu.qa

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com