Does board independence moderate the effect of politician directors on CSR disclosure? Evidence from the publicly listed banks in Bangladesh

Abstract

This study aims to investigate the moderating effect of independent directors on the relationship between politicians on the board and corporate social responsibility disclosure (CSRD).Design/methodology/approach – The ordinary least square has been used to analyze the CSRD data collected from the annual reports of all 30 listed banks of Bangladesh covering six years period rangingfrom 2013–2018. Further, the study has applied the generalized method of moments to prove the robustness of the model across the endogeneity issue. Findings – The study found a positive relationship between board independence and CSRD that indicates board independence enhances the CSRD to a great extent. On the contrary, the inclusion of politicians on the board has shown a negative impact on CSRD that implies the higher the presence of political members on the board of a bank, the lower the involvement of the bank in CSR activities. However, board independence positively and significantly moderates the politician directors on the CSRD. The findings imply that if the independent directors are empowered, they play the role of whistleblowers that, in turn, mitigates the negative role of politician directors to CSRD.Research limitations/implications – The study suggests the banks’ management, and regulatorybodies formulate sound policies so that the banks are forced to include more independent directors withenough power and at the same time, reduce the politician directors on the board.Originality/value – The study extends debate on the political CSR and CSRD through validating the roleof board independence