Article
Details
Citation
Alwadani N, Al-Shaer H & Khaldoon A (2024) The impact of internal governance mechanisms on environmental performance of Saudi firms. International Journal of Accounting and Information Management, 32 (1), pp. 40-57. https://doi.org/10.1108/IJAIM-04-2023-0084
Abstract
Purpose
This study aims to explore whether 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, this study applies panel data models to examine the research hypotheses.
Findings
The findings show significant positive associations between the existence of a sustainability committee, the publication of separate sustainability reports and the independent external assurance of these reports and environmental performance. This study also finds that the composite internal governance index is significant and positively associated with environmental performance.
Practical implications
Policymakers should support the creation of a sustainability committee on the boards of Saudi firms and review its role and responsibilities. The findings of this study inform regulators of the importance of the existence of independent external assurance of the 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 Arabian Government has implemented a range of policies and initiatives aimed at improving environmental performance, which is a main focus of Saudi Vision 2030 to achieve environmental sustainability. Therefore, this study provides unique evidence and new insights on the impact of internal governance on corporate environmental performance in the Saudi context.
Keywords
Environmental performance; Sustainability reports; Sustainability committee; External assurance; Internal governance
Journal
International Journal of Accounting and Information Management: Volume 32, Issue 1
Status | Published |
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Funders | Newcastle University |
Publication date | 19/01/2024 |
Publication date online | 28/11/2023 |
Date accepted by journal | 28/11/2023 |
ISSN | 1834-7649 |
People (1)
Professor in Accounting, Accounting & Finance