Abstract
This paper investigates the association between board characteristics and the company’s corporate social responsibility (CSR) assurance decision in China. By examining 2054 firm-years of Chinese listed companies with CSR reports from 2008 to 2012, we find that firms with a large board size, more female directors, and separation of CEO and chairman positions are more likely to engage in CSR assurance. Gender diversity also influences the CSR assurance provider choice. However, board independence and overseas background of the CEO do not affect the CSR assurance decision. Inconsistent with our prediction, firms with foreign directors are less likely to engage in voluntary CSR assurance. In summary, this research provides in-depth insights into the determinants of Chinese firms’ voluntary CSR assurance.
Conclusion
This study contributes to the body of CSR literature by investigating the association between board characteristics and a firm’s voluntary CSR assurance decision, using a sample of 2054 firm-year observations over the period of 2008–2012 in China. We find that a firm’s CSR assurance decision is positively and significantly associated with board size, the number of female directors, as well as the segregation of chair and CEO position. Overall evidence is consistent with the view that board diversity contributes to the strategic decision of CSR assurance. That is, a more diversified board can influence the management understanding of CSR activities and better capture the comparative benefits of CSR assurance in enhancing information quality and stakeholder confidence. Furthermore, although board independence has been proven as an important corporate governance structure in enhancing financial information transparency, at least in the Chinese setting, board independence seems to have little impact on voluntary CSR assurance decisions, suggesting that independence is more for appearances and is in reality more of a ‘‘token’’ symbol.
Complementary to prior literature, this paper addresses the influential factors of Chinese CSR assurance practices at the board level. Given that the profession-wide effort in improving non-financial assurance services, and integrating this type of service with financial information audits have positive influences on the community and firms,6 our findings will be of interest for the accounting profession as well as the other certification professions in understanding the CSR assurance market in China and the role of the board in the market.
