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The impact of internal governance mechanisms on environmental performance of Saudi firms

Lookup NU author(s): Professor Habiba Al-ShaerORCiD

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This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).


Abstract

Purpose- We argue that firms that have a sustainability committee operating on the board, publish separate sustainability reports that are externally assured by an independent external audit, and have large and active boards are more likely to be engaged in environmental practices and have better environmental performance. Design/methodology/approach- Based on a sample of firms listed on the Saudi Stock Exchange, covering the period 2014–2021, we apply panel data models to examine the research hypotheses. Findings- Our findings show significant positive associations between the existence of sustainability committee, the publication of a separate sustainability reports, and the independent external assurance of these reports and environmental performance. We also find that the composite internal governance index is significant and positively associated with environmental performance. Practical implications- Policy makers should support the creation of sustainability committee on the boards of Saudi firms and review its role and responsibilities. Our findings inform regulators of the importance of the existence of independent external assurance of sustainability reports of Saudi firms to enhance the credibility and reliability of these reports. Managers need to establish devoted committees committed to sustainability related tasks that help coordinate communications between the firm and stakeholders. Originality/value- The Saudi Arabia government has implemented a range of policies and initiatives aim to improve environmental performance which is a main focus of Saudi Vision 2030 to achieve environmental sustainability. Therefore, we provide a unique evidence and new insights on impact of internal governance on corporate environmental performance in the Saudi context.


Publication metadata

Author(s): Alwadani N, Al-Shaer H, Albitar K

Publication type: Article

Publication status: Published

Journal: International Journal of Accounting & Information Management

Year: 2024

Volume: 32

Issue: 1

Pages: 40-57

Print publication date: 19/01/2024

Online publication date: 28/11/2023

Acceptance date: 20/10/2023

Date deposited: 28/11/2023

ISSN (electronic): 1834-7649

Publisher: Emerald

URL: https://doi.org/10.1108/IJAIM-04-2023-0084

DOI: 10.1108/IJAIM-04-2023-0084

ePrints DOI: 10.57711/46z6-af02

Data Access Statement: Availability of data and material (data transparency): Data are available from the authors upon reasonable request


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