The Impact of Board of Director's Characteristics on Mandatory Non-Financial Reporting Compliance: A Study of Listed Companies in Portugal

Drawing on a complementary perspective of the agency, legitimacy and institutional theories, the purpose of this paper is to investigate the influence of board of directors' characteristics on the level of non-financial reporting compliance, imposed by the Portuguese Decree-Law (DL) no 89/2017. Based on a sample of Portuguese listed companies, the research methodology uses a content analysis of the annual reports/non-financial reports, collected in the first mandatory period for the adoption of DL 89/2017. To assess the level of compliance with the Portuguese diploma, we have developed a disclosure index of mandatory information, which is the dependent variable of a multivariate regression model. This index was correlated with some board of directors' characteristics, such as size, the number of meetings, gender diversity and the independence of its members. The results show a high degree of compliance with DL 89/2017 (index = 0.875). The study finds a significant positive influence of proportion of women directors on non-financial mandatory disclosure. As far as we know, previous research has not addressed the influence of corporate governance, such as board's characteristics, on mandatory non-financial reporting. The findings may contribute to the accounting regulatory bodies, with regard to potential enforcement mechanisms, in the case of non-compliance with the Portuguese diploma, specially those related to corporate governance mechanisms.