Corporate governance and environmental disclosure: a comparative analysis

Purpose - This study aims to investigate the influence of corporate governance (CG) on environmental disclosure (ED) practices within UK and US firms, addressing the contemporary challenges confronting firms in both contexts. Design/methodology/approach - Using the dynamic panel regression framework of system generalised method of moment (GMM), this study analyses a sample comprising 121 FTSE and 200 S&P firms from 2010 to 2020. Findings - The findings emphasise the dynamic nature of ED practices among UK and US firms, demonstrating their propensity to swiftly adjust to desired levels whenever deviations occur. Besides, this study identifies board independence and the frequency of board meetings as significant determinants of ED for UK firms. In contrast, for US firms, board independence and audit committee independence are found to be significant determinants of ED. Research limitations/implications - The research highlights the fundamental role played by CG in shaping how firms in the UK and the US navigate agency problems and respond to diverse stakeholder demands through ED in their annual reports. This study advocates for the promotion of robust governance systems that concurrently serve the purposes of accountability and monitoring to bridge the information expectation gap between firms and stakeholders. The findings reinforce the necessity for regulatory initiatives involving policy formulation and corporate oversight to enhance private sector awareness regarding environmental reporting practices. Originality/value - This study contributes to the scarce literature on the impact of board and audit committee characteristics on ED practices in the UK and US contexts. In addition, by using the system GMM estimation technique, this study provides robust and updated evidence that addresses the weaknesses inherent in previous studies.