Received: 22 November 2020 Revised: 24 March 2021 Accepted: 25 March 2021

DOI: 10.1002/bsd2.166

RESEARCH ARTICLE

CEO characteristics and environmental disclosure of listed

firms in an emerging economy: Does sustainability reporting
format matter?

Dr Kofi Mintah Oware1 | Dr Dadson Awunyo-Vitor2

1
Department of Business Administration,
Mangalore University, Mangalagangothri, India Abstract
2
Department of Agricultural Economics, The study's purpose examines chief executive officer (CEO) characteristics, sustainability
Agribusiness and Extension, Kwame Nkrumah
reporting format, and environmental disclosure of listed firms in India. Eight hundred
University of Science and Technology, Kumasi,
Ghana firm-year observations across India's firms applied panel regression with random effect
assumptions and general method of moment. The first findings show that reporting for-
Correspondence
Dr Kofi Mintah Oware, Department of mat has a positive and statistically significant association with environmental disclosure.
Business Administration Mangalore University
The second findings show that CEO age and CEO tenure have an insignificant associa-
Mangalagangothri-574199 Karnataka, India.
Email: [email protected] tion, but CEO duality negatively associates with environmental disclosure. The third find-
ings show that CEO characteristics (tenure and duality) × report format is insignificant.
However, the CEO age × report format has a positive and statistically significant associa-
tion with listed firms' environmental disclosure in India. The strategic implication shows
that the choice of a stand-alone sustainability reporting in environmental communication
disclosure is a strategic benefit that secures strategic investors and investment in the
firm. For the firm to be recognized as a strategic partner in global sustainable develop-
ment goals, CEOs with longer tenure and aged CEOs engagements are an unsuitable
investment, which Indian firms must not pursue. Endogeneity problems across panels are
addressed in this study. This study's novelty examines the interactive effect of CEO char-
acteristics and sustainability report format on environmental disclosure in India.

KEYWORDS
CEO characteristics, environmental disclosure, institutional theory, India, stakeholder theory,
sustainability report format

1 | I N T RO DU CT I O N agenda needs a scholarly take. Previous authors examined CEO hubris

and unethical behavior (Zhang et al., 2020). However, the outcome falls
European Commission, in its green paper, carved a definition for corpo- short in the strategic implication of CEO decisions due to its character-
rate social responsibility (European Commission, 2001). Central to this istics. The consequence is underestimating the disclosure risk
definition is the role of the chief executive officer (CEO) because the (i.e., environmental disclosure), which can affect a firm (Liu &
CEO undertakes strategic decisions, which includes the supervision of Nguyen, 2020). Likewise, Theissen and Theissen (2020) also raised the
the integration of listed firm's reporting (Altarawneh et al., 2020; concern in the interpretation of CEO characteristics and corporate pol-
European Commission, 2001; Godos-Díez et al., 2020; Haider lution and yet still, not much has address CEO characteristics and envi-
et al., 2019). However, there is an associated risk of unclarity of ronmental disclosure concerns. In addition, the CEO's power includes
reporting that may not meet stakeholder expectations (Martino the choice of the sustainability reporting format for environmental dis-
et al., 2020). Understanding the CEO's role and its characteristics as the closure (Hassan et al., 2020; Hassan & Guo, 2017). However, there is
world pursue the firm's inclusion in the global sustainable development little information on the sustainability report format and CEO

Bus Strat Dev. 2021;1–12. wileyonlinelibrary.com/journal/bsd2 © 2021 ERP Environment and John Wiley & Sons Ltd. 1
2 OWARE AND AWUNYO-VITOR

concerning environmental disclosure. The CEO's influence is needed carbon footprint left after its operations. CEOs have a mandate to
when stakeholder and institutional theory seek to reduce information report back to shareholders about the effort to assure stakeholders
asymmetry problems (Romito & Vurro, 2020) on environmental perfor- from being classified as the owners of irresponsible firms. The combi-
mance and disclosure (Cubilla-Montilla et al., 2020). Therefore, this nation of the need to meet stakeholders' demand and meet interna-
study examines CEO characteristics, choice of sustainability reporting tional organization convention summarized in global sustainable
format, and environmental disclosures of listed firms in India, using development (SDG) makes institutional and stakeholder theory appro-
institutional and stakeholder theory to interpret the relationships. priate in explaining the CEO characteristics, sustainability reporting
The present literature provides a link between CEO characteris- format, and environmental disclosure. Institutions include formal and
tics (i.e., tenure, duality and age) and environmental disclosures not formal, and have norms and rules, including cultural norms and
(Cho et al., 2019; Elsayih et al., 2020; Razali et al., 2016; Sannino rules (Matten & Moon, 2008). A study showed that the institutional
et al., 2020; Tran & Pham, 2020). Similarly, there is a link between sus- theory compels new CEO to more than likely disclose environmental
tainability reporting format and environmental output of carbon (non) information (Lewis et al., 2014). Likewise, we also see that dissemina-
industries (Hassan & Guo, 2017) and also sustainability disclosure and tion of environmental performance is influenced by normative,
report format (Hassan et al., 2020). However, there is not enough lit- mimetic, and coercive pressures (Cubilla-Montilla et al., 2020). An
erature to conclude the association between CEO characteristic and increase in environmental disclosure addresses the information asym-
environmental disclosure. In addition, there no studies in an emerging metry problem that stakeholders face (Romito & Vurro, 2020). None-
economy that examines report format and environmental disclosure. theless, stakeholders, whether primary or secondary, still requires
Lastly, no studies examine the interactive effect of report format and information for decision making (Clarkson, 1995; Freeman, 1984; Mis-
CEO characteristics on environmental disclosure. Accordingly, the hra & Suar, 2010). Therefore, the interpretation of this study with
present study investigates, first, sustainability reporting format and stakeholder and institutional theory adds new knowledge to CEO
environmental disclosure, second, CEO characteristics and environ- characteristics, sustainability reporting format, and environmental
mental disclosure, and lastly, the interactive effect of CEO characteris- disclosure studies.
tics and report format on environmental disclosure. We use panel
data from 2010 to 2019, consisting of 80 firms with 800 firm-year
observations across India that meet the study criteria. We applied 2.2 | Sustainability reporting format and
descriptive statistics, panel regression with random effect assump- environmental disclosure
tions, and a dynamic model (General Method of Moment) to examine
the study. Economic activity transforms natural resources into production,
The study contributes to the existing knowledge in three ways. consumption, and waste (Dagiliene et al., 2020). It sometimes leads to
First, no studies have examined the interactive effect of CEO charac- a negative footprint on the natural environment. There is a mitigated
teristics and sustainability report format in determining the increase impact on the environment through environmental disclosure, which
or decrease in environmental disclosure of listed firms. Previous stud- seeks to address the negative effect on the environment through
ies examined the interactive effect of report format and voluntary investments in reclining, efficient use of energy, and pollution preven-
assurance (Reimsbach et al., 2018) and not CEO characteristics. Sec- tion (Dagiliene et al., 2020). However, evaluated sustainability perfor-
ond, this study is the first to test the report format on environmental mance and efforts of listed firms in India and using 100 firms between
disclosure because the previous study examined the report format on 2016 and 2017 showed a significant gap in sustainability investment
environmental output or performance (Hassan & Guo, 2017) and not (Jha & Rangarajan, 2020).
disclosure as reflected in this study. Lastly, previous studies have Previous studies also examined the sustainability reporting index
raised concerns about the lack of standardization of corporate sus- and environmental disclosure of 52 Indonesia listed firms. The results
tainability data reporting. However, the adoption by firms of stand- showed that sustainability reporting has a significant relationship with
alone sustainability reporting improve environmental disclosure and environmental disclosure (Sumaryati & Rohman, 2019). However,
may also address the concerns raised by academics and industry there are not many studies that examine sustainability reporting for-
players in the standardization of corporate sustainability data and the mat and environmental disclosure. The few studies included corporate
lack of harmonization of regulation on sustainability reporting. reporting format and the environmental output of the carbon and
non-carbon intensive industries of 100 major European companies
(Hassan & Guo, 2017). In addition, there is sustainability disclosure on
2 | T H E O R Y , L I T E R A T U R E R E V I EW , A ND reporting format, using a sample of 100 of the largest Bangladeshi
H Y P O T H E S E S D E V E LO P M E N T companies (Hassan et al., 2020). However, there are no studies that
examine report format and environmental disclosure. The outcomes
2.1 | Institutional theory and shareholder theory of the reviews on report format and environmental performance
showed mixed findings. Thus, independent environmental reports
Institutions, including stakeholders, pressure firms to disclose their appear to have higher environmental information levels than busi-
environmental performance for utilizing the natural resource and nesses that combine financial and environmental disclosure in annual
OWARE AND AWUNYO-VITOR 3

reports (Hassan & Guo, 2017). Companies that produce more sustain- that CEO tenure has a negative statistically significant association
ability information are more likely to integrate their sustainability with carbon performance (Elsayih et al., 2020). Likewise, CEO charac-
information with the annual financial reports (Hassan et al., 2020). teristics and environmental, social and governance (ESG) performance
Furthermore, the choice of reporting format interaction with the vol- studies used Harvard Business Review of best-performing CEOs in
untary assurance of sustainability information showed that the 2016 showed that CEO with longer tenure has a negative association
assurance effect was weaker in the case of integrated reporting with the increase in ESG performance indicators (Garcia-Blandon
compared to separate reporting (Reimsbach et al., 2018). Likewise, an et al., 2019). Nonetheless, we expect that CEOs with longer tenure
integrated reporting format enhanced annual reporting information to will contribute to the rise in environmental disclosure because a CEO
stakeholders (James, 2015). with longer tenure understands the need to continuously assure
We perceive a mixed association (Hassan et al., 2020; Hassan & shareholders of the firm's responsibility to address environmental
Guo, 2017; James, 2015; Reimsbach et al., 2018). First, the reasons concerns after exploiting natural resources.
may include the lack of standardization of corporate sustainability We further believe that using a stand-alone sustainability report
data, which potentially affect the impact of sustainability reporting provides more information and reduces information asymmetry prob-
format on investors who seek clarity and comparability (Cort & lems, even though previous studies showed a lack of standardization
Esty, 2020). Second, the lack of harmonization of regulation on sus- of corporate sustainability data and harmonization of regulation on
tainability reporting can have asymmetry information problems when sustainability reporting concerns (Cort & Esty, 2020; Kinderman,
a firm chooses a sustainability reporting format to communicate infor- 2020). We believe the adoption of stand-alone sustainability reporting
mation to stakeholders (Kinderman, 2020). In the light of the scanty will improve standardization. Therefore, a combination of a CEO with
literature on report format and the unavailability of studies in an longer tenure and a stand-alone sustainability reporting communicates
emerging economy that examines report format and environmental more information, reflecting an increase in listed firms' environmental
disclosure, we formulate a hypothesis to explore this association, disclosure. Hence, the hypotheses state that:
using the Indian stock market as the testing ground. We expect a
stand-alone sustainability report to provide more information and H2a. CEO tenure has a positive effect on environmental disclosure
thereby reduce information asymmetry problems. Therefore, the of listed firms in India.
hypothesis state that:
H2b. The interactive effect of CEO tenure and reporting format has
H1. Sustainability reporting format has a positive effect on environ- a positive effect on environmental disclosure of listed firms in
mental disclosure of listed firms in India. India.

2.3 | CEO tenure and environmental disclosure 2.4 | CEO duality and environmental disclosure

A CEO is influenced by its characteristics when undertaking strategic CEO as the central to a strategic decision has been emphasized in
decisions associated with risk (Godos-Díez et al., 2020; Martino most studies (Altarawneh et al., 2020; Godos-Díez et al., 2020), but
et al., 2020). However, there is still not enough literature to conclude the sometimes the CEO decision leads to insignificant association with
association between a CEO characteristic (i.e., CEO tenure) and environ- risk-taking (Martino et al., 2020). Nonetheless, the combined role
mental disclosure. For example, a Korean study focused on CEO charac- (CEO and chairperson) may create a burdensome responsibility, which
teristics and corporate environmental performance and used data from can negatively affect the strategic decision (i.e., decision to increase
49 companies in the textile and apparel industries. The study's findings environmental disclosure). An argument is made that a new CEO is
showed that CEO tenure has a positive association with corporate envi- more likely to disclose environmental information and that institu-
ronmental performance (Cho et al., 2019). Another study examined CEO tional theory compels the disclosure (Lewis et al., 2014). However,
demographics and sustainable business models with a sample of limited studies have examined the duality in a role by the CEO and
100 Fintech firms. The qualitative and quantitative analysis findings the increase in environmental disclosure. A sample survey of
showed that CEO tenure is positively and statistically significant to influ- 128 firm-year observations from Australian firms showed that CEO
ence the sustainable development model (Sannino et al., 2020). duality has a positive, statistically significant association with carbon
A literature review documents not only a positive association but performance (Elsayih et al., 2020). However, using sample data from
also a negative association between CEO tenure and environmental the Johannesburg stock exchange, the authors argued that CEO
disclosure in both developed and emerging economies. The authors of duality is insignificant in influencing corporate reporting, including
a study examined CEO characteristics and environmental disclosure environmental disclosure (Corvino et al., 2020).
using annual reports of companies in the Malaysian stock exchange. We ask the question if the mixed association between CEO
The findings showed that CEO tenure has a negative association with duality and environmental disclosure (Corvino et al., 2020; Elsayih
environmental disclosures (Razali et al., 2016). Another study using a et al., 2020) is due to lack of standardization of corporate sustainabil-
sample of 128 firm-year observations from Australian firms showed ity data and harmonization of regulation on sustainability reporting
4 OWARE AND AWUNYO-VITOR

concerns (Cort & Esty, 2020; Kinderman, 2020). The answer to this ques- H4a. CEO age has a negative effect on environmental disclosure of
tion is unclear, especially given that the use of sustainability reporting listed firms in India.
format is significant to the increase of environmental disclosure
(Hassan & Guo, 2017) but sometimes contribute to a decrease in envi- H4b. The interactive effect of CEO age and sustainability reporting
ronmental disclosure (Hassan et al., 2020). We think that CEO duality format has a positive effect on environmental disclosure of
may lead to a reduction in environmental disclosure. However, the listed firms in India.
underlying strength of institutional theory may cause a positive associa-
tion if a characteristic of CEO duality when combined with the choice of
stand-alone sustainability reporting to communicate environmental dis- 3 | RESEARCH DESIGN AND
closure information to stakeholders. We perceive a combination will METHODOLOGY
instead cause an increase in environmental disclosure of listed firms in an
emerging economy. Therefore, we propose the below hypotheses that: 3.1 | Data

H3a. CEO duality has a negative effect on environmental disclosure To test CEO characteristics, sustainability reporting format, and envi-
of listed firms in India. ronmental disclosure, this study constructs panel data from 2010 to
2019 consisting of 80 firms with 800 firm-year observations across
H3b. The interactive effect of CEO duality and sustainability firms in India that meets specific criteria. The criteria covers (i) large
reporting format has a positive effect on environmental disclo- firms under the Companies Act 2013, section 135 (ii) sustainability
sure of listed firms in India. reporting firms (iii) and firm in the non-banking sector. India's context
represents an emerging economy and data obtained from the Bombay
Stock Exchange (BSE).
2.5 | CEO age and environmental disclosure

Different studies have examined CEO and environmental disclosure 3.2 | Measurement of environmental disclosure
(Haider et al., 2019; Sannino et al., 2020) but with mixed findings. A study
examined CEO demographics and sustainable business models with a The morgan stanley capital international Environment, Social, Government
sample of 100 Fintech firms. It showed that the CEO age is positively and STATS research database has categorizations of variables and elements in
statistically significant to influence the sustainable development model the environment. We extract environmental disclosure from the con-
(Sannino et al., 2020). Likewise, in a sample of 2730 Australian firm-year structed adjusted ESG qualitative variables of employee relations, diversity,
observations for the period 2004–2013, the authors of the study suggest product quality, community, and environment (Deng et al., 2013; Lin &
that younger CEO increases the quality of information environment and Dong, 2018). We use a binary rating system and where each strength and
this may contribute to increases of other non-financial information, includ- concern coded 1 and 0, respectively. The difference between the adjusted
ing environmental disclosures (Haider et al., 2019). A content analysis strength score and the adjusted concern score is labelled as ENVt score.
study using financial times stock exchange 350 listed firms in the UK The strength elements of the environmental disclosure cover products
showed that CEO age has a statistically significant association with green- with efficient use of energy, pollution prevention programs, recycling abili-
house emissions disclosure (Chithambo et al., 2020). ties, clean energy, and ISO certification. The concern elements cover fines
Further studies examined the moderating effect of CEO age. The in hazardous waste, fines in regulatory issues, ozone depletion chemicals,
authors of the study examined a sample data of 736 Chinese listed producer agriculture chemicals, and revenue from coal or oil items.
firms. The outcome of the study, among others, showed that CEO age
!
moderates positively the association between CEO succession and X1 Strenthjt Concernjt
ENVt = − ð1Þ
post-succession corporate social responsibility (CSR) (Liu, 2020). Not n=0
Ujt V jt
lonely is there a study on moderating variable of CEO age, but there are
studies with the insignificant outcome. For example, a study examined The subscript j represents the dimensions. U and V is the number
CEO age and SME's environmental performance of 810 firms, and the of strength and concerns in year t. Strength is the binary indicator and
findings showed that CEO age is insignificant with SME's environmental uses 1 if present and 0 otherwise. Likewise, the concern is the binary
performance of firms in Vietnam (Tran & Pham, 2020). indicator and uses 1 if present and 0 otherwise.
We believe that increase in CEO age may lead to a decrease in
environmental disclosure because of an inverted U-shaped rela-
tionship in a study of education level and age (Castelló- 3.3 | Model specification
Climent, 2019). Similarly, a young CEO is more likely to choose a
stand-alone sustainability reporting to communicate environmental To examine CEO characteristics, sustainability reporting format,
disclosure information to stakeholders. Therefore, we propose the and environmental disclosure, we specify the following economic
below hypotheses that: model:
OWARE AND AWUNYO-VITOR 5

X
ENVit = α + β1 CEOCharit + β2 SRFit + β3 CEOChar x SRFit + ϕCTRLit + μit reporting format. Different studies have measured CEO characteris-
ð2Þ tics using the same proxies (Bui et al., 2020; Garcia-Blandon
et al., 2019; Ng & Sears, 2012). CEO duality measures the CEO job's
where i and t denote the cross-sectional units and period, respectively, dual role combined with the board chairman role, and where the CEO
ENVit represents environmental disclosure. CEOCharit also represents has both roles, a binary of one is awarded or otherwise zero (Bui
CEO characteristics, which cover CEO age, CEO tenure, and CEO duality. et al., 2020). CEO tenure is the fiscal year minus the year the CEO has
SRFit also represents the sustainability reporting format of listed firms. joined the board of directors (Garcia-Blandon et al., 2019). CEO age is
The variable CTRL represents the control variables, which include, size of the years from the date of birth (Ng & Sears, 2012). A human capital
the sustainability committee, financial leverage, firm size, type of industry, study on education and economic growth showed an inverted U-
independent directors, total board size, and the year effect. Table 1 shaped curve after years of education peaked at the age group 40–
reports the definition and description of variables with their data sources. 49, but 50 years upwards showed a downwards trend (Castelló-
Climent, 2019). Likewise, the sustainability reporting format repre-
sents the choice that a firm makes between a sustainability report,
3.3.1 | Dependent variable which integrates with the financial reporting of a firm or a stand-alone
sustainability report as a document to stakeholders (Hassan
ENVit defines the dependent variable, which shows how responsible a et al., 2020; Hassan & Guo, 2017). Table 1 reports the definition and
firm is doing in meeting the global sustainability agenda on the envi- description of variables with their data sources.
ronment. Different studies have measured environment disclosure as
part of CSR engagement, but this study concentrates on environmen-
tal disclosure as a dependent variable (Gupta & Krishnamurti, 2018; 3.3.3 | Control variables
Lin & Dong, 2018). The details are in Section 3.2.
CTRLit represents the control variables, including firm size, financial
leverage the board size, independent directors, size of the sustain-
3.3.2 | Independent variable ability committee, type of industry, and year effect. Board size is the
total number of directors serving on the board and mostly shows the
CEOCharit and SRFit are independent variables in this study and positive significance, and independent directors are outside directors
represents CEO age, CEO tenure, CEO duality, and sustainability on the board (Inoue & Lee, 2011). Firm size measures a firm's

TABLE 1 Summary of the description of the variables (under methodology)

Expected
Variables Symbol Description sign Data source Sources
Environmental disclosure ENV The details are in Section 3.2. +/− Self-constructed (Lin & Dong, 2018)
Sustainability reporting SRF 1 for stand-alone sustainability report and 0 +/− Self-constructed (Hassan et al., 2020)
format otherwise
CEO duality CEOD 1 for dual role of CEO and board chair and 0 +/− Self-constructed (Bui et al., 2020)
otherwise
CEO tenure CEOT Fiscal year minus the year the CEO has joined the +/− Self-constructed (Garcia-Blandon
board of directors et al., 2019)
CEO age CEOA The years from the date of birth + Self-constructed (Ng & Sears, 2012).
Size of sustainability SUSM The size of the committee + BSE/annual (Kend, 2015)
committee reports
Financial leverage FL Total liabilities relative to total assets − Balance sheet (Mishra a & Modi, 2013)
analysis
Firm size FS Natural logarithm of the total assets + BSE/annual (Razali et al., 2016)
reports
Type of industry DIND One for the presents of hazardous and zero − Self-constructed (Jackson &
otherwise Apostolakou, 2010)
Ind. Board IBZ Number of independent directors on the board +/− BSE/annual (Inoue & Lee, 2011).
reports
Board size TBZ Number of directors on the board + BSE/annual (Inoue & Lee, 2011)
reports
Year effect YDU Represents the timing effect + BSE/annual (Qui et al., 2016).
reports
6 OWARE AND AWUNYO-VITOR

capacity to undertake CSR and sustainability activities and calculated 4.1 | Descriptive statistics and correlation
as the natural logarithm of the total assets of the firm and mostly has coefficients and variance inflation factors
a positive association with environmental performance (Razali
et al., 2016). Financial leverage measures the ratio of total liabilities Table 2 presents the descriptive statistics of variables. The descriptive
to total assets (Clarkson et al., 2008; Cormier et al., 2011; Mishra & statistics show that an average of 70% of the firms under study has
Suar, 2010) and has negative associations. In addition, some indus- made various forms of environmental disclosure consistent with the
tries are more prone to hazardous waste than others and represen- sustainable development goal agenda. CEO age shows that the mini-
ted by a dummy variable of 1 for the presents and zero otherwise mum age is 28 years, and the maximum year is 82 years. The average
(Jackson & Apostolakou, 2010; Shabana et al., 2016). The sustain- age of an Indian CEO is 54.4 years, and age is likely to affect whether
ability committee represents the committee's size that supervises environmental disclosure is increased or not in an emerging economy
the implantation of CSR and sustainability agenda of the firm, and context. CEO tenure has average years of 8.4. An indication that the
this committee has an effect of disclosure of the firm (Kend, 2015). CEO office is occupied at an average of 8.4 years and an extended
The year indicator dummy represents the timing effect and uses a stay in the office gives the CEO power to affect listed firms' environ-
dummy variable in the model to control the year effect (Qui mental disclosure. The study shows that less than 31% of CEOs have
et al., 2016). a combined role in chairmanship and the CEO role in the listed firms.
The descriptive statistics show that 48.8% of firms report separate
sustainability reporting from the firm's integrated reporting. The study
3.4 | Methodology also shows that 20% of the study are hazardous firms, and 80% are
non-hazardous firms. Lastly, the study shows that the study firms
We applied the General Method of Moment (GMM) and Panel Ran- have 44.2% of their financing source from debt.
dom Effect estimators to test H1, H2, H3, and H4 of the study and Table 3 shows the correlation coefficients and variance inflation
results analyzed with Stata 15.0. The choice of the GMM and random factor (VIF) under the study. The correlation between two variables
panel effect addresses endogeneity problems across panels explains the linear relationship that exit between the variables. The
(Wooldridge, 2002). Table 1 reports the definition and description of study shows a negative and weak but significant correlation between
variables with their data sources. Dynamic model (GMM) is chosen environmental disclosure and CEO duality. In addition, there is a nega-
because the literature review on CEO characteristics and CSR studies tive correlation between CEO age and tenure and environmental dis-
identified that endogeneity concerns in previous studies lowered the closure but insignificant. The study also shows a strong and positive
studies' quality (Velte, 2019). correlation between sustainability reporting format and environmental
disclosure, and the association is also significant. The control variables
(size of the sustainability committee, financial leverage, firm size, and
4 | EMPIRICAL RESULTS AND total board size) have a positive and significant correlation with envi-
DISCUSSIONS ronmental disclosure of listed firms in an emerging economy. The larg-
est significant correlation coefficient among the independent
Tables 2–5 show the empirical analysis of the study. Section 4.1 variables is 0.732 and falls below the threshold of 0.80 and, if
shows descriptive statistics and correlation coefficients, and variance exceeded, creates multicollinearity in a study (Damodar, 2004;
inflation factors. Section 4.3 shows the regression results. Dougherty, 2017). In addition, a multicollinearity test using a VIF

TABLE 2 Descriptive statistics

Symbol Obs. Mean SD Min. Max
Environmental disclosure ENV 800 0.696 0.405 0 1
CEO age CEOA 800 54.404 8.285 28 82
CEO tenure CEOT 800 8.441 9.065 1 53
CEO duality CEOD 800 0.305 0.461 0 1
Sustainability report format SRF 800 0.488 0.500 0 1
Sustainability committee members SUSM 800 2.441 2.306 0 9
Financial leverage FL 800 0.442 0.183 0.039 1.017
Firm size FS 800 11.752 1.486 7.593 15.864
Type of industry DIND 800 0.200 0.400 0 1
Independent board directors IBZ 800 5.831 1.779 1 14
Total board size TBZ 800 10.966 2.847 5 20
Year effect YDU 800 14.500 2.874 10 19
OWARE AND AWUNYO-VITOR 7

assess the degree of correlation among the variables. The results in

1.35
1.36
1.35
1.33
1.98
1.09
1.97
1.31
2.99
2.65
1.89
VIF
Table 3 shows no evidence of multicollinearity. Therefore, we can
deduce that there is no problem with multicollinearity in the model
equations.
12

1
4.2 | Panel regression tests

0.056
11

1
A poolability test (Pooled OLS verse Fixed Effect) and the Hausman
test are used to determine the model appropriateness between fixed

0.732*
0.122
effect and pooled OLS regression and also between Random Effects
10

1
(RE) and Fixed Effects (FE) (Baltagi, 2005; Hausman, 1978). The out-
come shows the appropriate model to perform the hypotheses under
−0.044 the study. F-test is equal to (R2UR − R2R)/m divided by (1 − R2UR)/(n

−0.000
0.154* − k), where R2UR is R2 of unrestricted regression, R2R is R2 of restricted
9

regression, m is the number of restrictions, n is the numbers of obser-

vations, and k is the number of parameters. A null hypothesis is where
0.422***
0.123***
0.402***
0.183***

pooled ordinary least square (OLS) is appropriate, and p-values are not
significant at 5% level of significance. The poolability test using F-test
8

under environmental disclosure shows F (79,712) = 178.22 and is sig-

nificant at 1% (p-value is equal to 0.000), hence pooled OLS rejected.
Using a Hausman test to choose between FE and RE, the p-value is
−0.100**

−0.131**
0.132***
0.126***

−0.065*

0.143, which is not significant. Hence RE is appropriate for environ-

mental disclosure.
7

1
0.339***
0.178***

0.115***
0.647***
−0.028

−0.038

4.3 | Regression results

6

The panel regression results are in Tables 4 and 5. H1 states sustain-

Note: **p < 0.05, ***p < 0.01 and *p < 0.10 level (two-tailed), Panel (N = 800), Pairwise correlation.

ability reporting format (SRF) has a positive effect on environmental

0.272***
0.097***
0.400***

0.142***
0.194***
0.068*

disclosure of listed firms in India. Model 4 from Table 4 shows that

0.038

SRF has a positive and statistically significant association with the

5

environmental disclosure of listed firms in India (β = 0.047***).

Model 8 from Table 4 under GMM shows that SRF has a positive
0.122***
0.178***
0.178***

0.089**
−0.025

−0.057

and statistically significant association with the environmental dis-

0.061*

0.065*

closure of listed firms in India (β = 0.040***). H1 is supported, and

4

the increase in India's environmental disclosure is consistent with

Correlation matrix and variance inflation factor

previous studies (Hassan & Guo, 2017; James, 2015). The increased
−0.105**
−0.135**

−0.074**
0.154***

0.155***
−0.068*

information resulting from stand-alone sustainability reports meets

−0.030

−0.002
0.010

stakeholders demand and the SDG agenda and may account for the
3

increase in environmental disclosure of firms in India. In addition, it is

suggested that an increase in information (solution information asym-
0.236***

0.153***

0.211***

0.146***

metry problem) on environmental disclosure can reduce whitewashing

−0.059*

−0.018
0.067*
0.350

0.006

0.020

and allow investors to factor environmental issues in investment deci-

2

sions. Similarly, it is suggested that increased disclosure leads to effi-

cient use of energy and pollution prevention (Dagiliene et al., 2020).
This is because independent environmental reports appear to have
−0.104**
0.449***
0.103***
0.097***
0.357***

0.152***
−0.032
−0.003

0.046
0.009

0.034

higher environmental information levels than businesses that combine

financial and environmental disclosure in annual reports (Hassan &
1
1

Guo, 2017).
TABLE 3

H2a states that CEO tenure has a positive effect on environmen-

CEOD

SUSM
CEOA
CEOT

DIND

YDU
ENV

TBZ
SRF

tal disclosure of listed firms in India. Model 2 from Table 4, under

IBZ
FS
FL

panel regression, shows that CEO tenure (CEOT) has a positive and
8 OWARE AND AWUNYO-VITOR

TABLE 4 CEO characteristics, sustainability reporting format, and environmental disclosure

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8

ENV-RE ENV-RE ENV-RE ENV-RE ENV-GMM ENV-GMM ENV-GMM ENV-GMM
SUSM −0.001 −0.001 −0.001 −0.002 −0.001 −0.002 −0.002 −0.003
[0.002] [0.002] [0.002] [0.002] [0.003] [0.003] [0.003] [0.003]
FL 0.078* 0.074* 0.081** 0.076* 0.012 0.010 0.010 0.009
[0.040] [0.040] [0.040] [0.040] [0.061] [0.061] [0.062] [0.058]
FS 0.040*** 0.040*** 0.040*** 0.038*** 0.015 0.015 0.013 0.012
[0.012] [0.012] [0.012] [0.012] [0.022] [0.022] [0.023] [0.021]
DIND −0.022 −0.019 −0.007 −0.026
[0.107] [0.108] [0.107] [0.099]
IBZ 0.001 0.001 0.002 −0.001 −0.000 −0.000 0.000 0.001
[0.005] [0.005] [0.005] [0.005] [0.006] [0.006] [0.005] [0.005]
TBZ 0.003 0.004 0.003 0.005 0.001 0.001 0.001 0.000
[0.004] [0.004] [0.004] [0.004] [0.005] [0.005] [0.005] [0.004]
YDU 0.003 0.002 0.002 0.003 −0.001 −0.000 −0.001 0.002
[0.002] [0.002] [0.002] [0.002] [0.003] [0.003] [0.003] [0.003]
Independent variables
CEOA −0.001 0.002
[0.001] [0.001]
CEOT 0.001** 0.000
[0.001] [0.001]
CEOD −0.074*** −0.066***
[0.017] [0.024]
SRF 0.047*** 0.040***
[0.010] [0.013]
R2 within 0.045 0.050 0.068 0.069
2
R between 0.144 0.141 0.171 0.208
R2 overall 0.135 0.133 0.159 0.194
Observations 800 800 800 800 640 640 640 640
No. of clusters 80 80 80 80 80 80 80 80
Wald chi- 40.96*** 45.43*** 61.02*** 64.56*** 52.38*** 51.65*** 58.47*** 67.06***
square
No. of 20 20 20 20
instruments

Note: Robust standard errors are in parenthesis. *, **, *** indicates significance at 10%, 5% and 1% levels respectively. The type of industry is dropped in
the GMM model of estimation. Also, one-step GMM is used in the study.

statistically significant association with the environmental disclosure H2b states that the interactive effect of CEOT and reporting
of listed firms in India (β = 0.001***). However, Model 6 from Table 4 format has a positive effect on environmental disclosure of listed
under GMM shows that CEOT has no association with the environmen- firms in India. Model 2 from Table 5, under panel regression, shows
tal disclosure of listed firms. Relying on GMM over panel regression with that CEOT and SRF have a positive and statistically significant
random effect, H2a is not supported. The finding is inconsistent with the association with the environmental disclosure of listed firms in
results that showed that CEOT has a positive association with corporate India (β = 0.002***). However, Model 5 from Table 5 under GMM
environmental performance (Cho et al., 2019). We expected that CEO shows that CEOT and SRF have no association with the environ-
with longer tenure would understand better the need to continuous mental disclosure of listed firms in India. Relying on GMM over
assure shareholders of the firm's responsibility to addresses environmen- panel regression with random effect, H2b is not supported. There
tal concerns after its exploitation. In addition, we perceived that the insti- are no current studies on the interactive effect of CEOT and
tutional theory would have compels the disclosure. However, our reporting format. However, the insignificant association is incon-
expectation falls short in the context of this study. Therefore, it is sistent with individual reviews of CEOT and corporate environ-
suggested that the Indian CEOs with longer tenure are fewer risk-takers mental performance (Cho et al., 2019) and also corporate reporting
(Martino et al., 2020) in promoting SDG indicators and may account for format and environmental output (Hassan & Guo, 2017), which
the insignificant association. showed a positive association. The insignificant association from
OWARE AND AWUNYO-VITOR 9

TABLE 5 Interactive effect (CEO characteristics × sustainability reporting format) and environmental disclosure

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

ENV-RE ENV-RE ENV-RE ENV-GMM ENV-GMM ENV-GMM
SUSM −0.002 −0.002 −0.001 −0.003 −0.002 −0.002
[0.002] [0.002] [0.002] [0.003] [0.003] [0.003]
FL 0.079** 0.074* 0.077** 0.010 0.096 0.009
[0.040] [0.040] [0.040] [0.059] [0.060] [0.062]
FS 0.039*** 0.039*** 0.039*** 0.012 0.014 0.015
[0.012] [0.017] [0.012] [0.022] [0.022] [0.023]
DIND −0.027 −0.020 −0.022
[0.101] [0.105] [0.108]
IBZ −0.001 0.001 0.001 0.001 0.001 0.000
[0.005] [0.005] [0.005] [0.006] [0.006] [0.006]
TBZ 0.005 0.004 0.003 0.002 0.001 0.001
[0.004] [0.004] [0.004] [0.004] [0.005] [0.005]
YDU 0.003 0.003 0.003 −0.001 0.001 −0.001
[0.002] [0.002] [0.002] [0.003] [0.003] [0.003]
Interactive variables
CEOA × SRF 0.001*** 0.001***
[0.001] [0.001]
CEOT × SRF 0.002*** 0.001
[0.001] [0.001]
CEOD × SRF 0.007 0.001
[0.015] [0.022]
R2 within 0.060 0.053 0.045
2
R between 0.193 0.165 0.145
R2 overall 0.181 0.155 0.136
Observations 800 800 800 640 640 640
No. of clusters 80 80 80 80 80 80
Wald chi-square 56.49*** 49.23*** 41.09*** 63.40*** 55.28*** 51.36***
No. of 20 20 20
instruments

Note: Robust standard errors are in parenthesis. *, **, *** Indicates significance at 10%, 5% and 1% levels respectively. The type of industry is dropped in
the GMM model of estimation. Also, one-step GMM is used in the study.

the interactive variable effect may be due to the lack of standardi- as a reduction in the investment gap due to inadequate disclosures
zation of corporate sustainability data reporting. (Jha & Rangarajan, 2020) in environmental issues in India.
H3a states that CEO duality has a negative effect on environmental H3b states that the interactive effect of CEOD and reporting for-
disclosure of listed firms in India. Model 3 from Table 4, under panel mat has a positive effect on environmental disclosure of listed firms in
regression, shows that CEO duality (CEOD) has a negative and statisti- India. Model 3 from Table 5 under panel regression shows that CEOD
cally significant association with the environmental disclosure of listed and SRF have no association with the environmental disclosure of
firms in India (β = −0.074***). Model 7 from Table 4 under GMM shows listed firms in India. Model 6 from Table 5 under GMM also shows
that CEOD has a negative and statistically significant association with that CEOD and SRF have no association with the environmental dis-
the environmental disclosure of listed firms (β = −0.066***). H3a is closure of listed firms. Therefore, H3b is not supported. There are no
supported. The finding is inconsistent with the results that showed that current studies on the interactive effect of CEOD and reporting for-
CEOD has a positive, statistically significant association with carbon per- mat. We perceive the association from CEOD negates the positive
formance (Elsayih et al., 2020). Possible reasons leading to the negative association between report format and environmental disclosure,
association may be overburdensome on the duality in the role and thereby leading to an insignificant association from the interactive
thereby contributing to poor information communication. In addition, the variable. However, the insignificant association is consistent with indi-
CEO is central to strategic decisions, and the overburdensome may also vidual studies of CEOD and corporate environmental disclosure
lead to a weak strategic decision. The effect is a reduction in environ- (Corvino et al., 2020) and also inconsistent with the positive associa-
mental disclosure to shareholders and stakeholders. We also perceive tion between corporate reporting format and environmental output
the negative association contribute to what other authors have argued (Hassan & Guo, 2017).
10 OWARE AND AWUNYO-VITOR

H4a states that CEO age has a negative effect on environmental SRF has a positive and statistically significant association with listed
disclosure of listed firms in India. Model 1 from Table 4, under panel firms' environmental disclosure in India. The positive effect maybe
regression, shows that CEO age has no association with the environ- because there is increased information resulting from a stand-alone
mental disclosure of listed firms. Model 1 from Table 4 under GMM sustainability report. The increase in environmental disclosure
shows that the CEO age has no association with the environmental addresses the information asymmetry problem and enhances informa-
disclosure of listed firms. H4a is not supported. The finding is incon- tion to shareholders and stakeholders. The second findings show an
sistent with the results, which showed that the CEO age has a statisti- insignificant association between CEOT and environmental disclosure.
cally negative significant association with greenhouse emissions Also, the interactive variable of CEOT and report format has an insig-
disclosure (Chithambo et al., 2020). Moreover, this is inconsistent with nificant association with environmental disclosure. The reason for the
individual studies, which showed that younger CEO increases the insignificance may be due to the lack of standardization of corporate
quality of environmental disclosure (Haider et al., 2019). An observa- sustainability data. The third findings show that CEOD has a negative
tion of the study shows that a CEO age matters when the average of and statistically significant association with environmental disclosure.
CEOs is less than 50 years (Castelló-Climent, 2019). However, this However, the interactive variable of CEOD × reporting format has an
study has older CEOs, which contributes to an insignificant effect. insignificant association with environmental disclosure of listed firms
Older and aged CEOs less than likely to take up risk investment such in India. The reasons for the negative association may include over-
increase in environmental disclosures (Chithambo et al., 2020; burdensome on the duality in the role and thereby may contribute to
Martino et al., 2020). poor information communication to stakeholders. The fourth findings
H4b states that the interactive effect of CEO age and reporting show that CEO age is insignificant to the increase in environmental
format has a positive effect on environmental disclosure of listed disclosure. However, CEO age and SRF have a positive and statistical
firms in India. Model 1 from Table 5, under panel regression, shows association with the environmental disclosure of listed firms in India.
that CEO age and SRF have a positive and statistical association with The reasons may include that the choice of a stand-alone sustainabil-
the environmental disclosure of listed firms in India (β = 0.001***). ity report increases the quality of the information environment and
Model 1 from Table 4 under GMM also shows that CEO age and SRF therefore address the age problem identified in the context of listed
have a positive and statistical association with the environmental dis- firms in India, where the average of a CEO is 54.4 years.
closure of listed firms in India (β = 0.001***). H4b is supported. There
are no current studies on the interactive effect of CEO age and
reporting format. However, the significant association is consistent 6 | T H E I M P L I C A T I O N O F T H E ST U D Y
with individual reviews that showed that younger CEO increases the
quality of environmental disclosure (Haider et al., 2019) and is consis- 6.1 | Policy implication
tent with the positive association between corporate reporting format
and environmental output (Hassan & Guo, 2017). It is suggested that The choice of reporting format is a proactive and strategic
age, whether old or young, does not matter so far as the CEO chooses communication-driven activity. Therefore, policymakers need to adopt
a stand-alone sustainability reporting. The effect of the choice of a stand-alone sustainability reporting over sustainability report integrat-
stand-alone sustainability report increases the quality of the informa- ing with financial reporting to improve communication as a strategy to
tion environment and therefore address the age problem identified in address stakeholders' concerns. Likewise, a frown on the CEOD role
the context of listed firms in India, where the average of a CEO is must be pursued in an Indian context to increase environmental
54.4 years. disclosure, which is in line with the objectives of the SDG agenda.
In terms of the control variables in Tables 4 and 5, we find that
firm size and financial leverage are sensitive to environmental disclo-
sure of listed firms in India. Previous studies showed a positive associ- 6.2 | Managerial and strategic implication
ation between firm size and environmental performance (Razali
et al., 2016). However, other studies showed a negative association The evidence from this study encourages managers to choose stand-
between financial leverage and carbon disclosure (Darus et al., 2019). alone sustainability reporting because it increases the information on
environmental disclosure and can reduce whitewashing, and allow
investors to factor environmental issues in investment decisions. Such
5 | C O N CL U S I O N a choice improves risk in decision making by the CEOs of listed firms.
Another managerial implication is that the information asymmetry
The study's purpose examines CEO characteristics, SRF, and environ- problem improves and enhances information to shareholders and
mental disclosure of listed firms in India using stakeholder and institu- stakeholders. The implementation in the reduction of CEOD, which
tional theory as bases of interpretation. A panel data of 80 firms with overburdens CEOs, can enhancing environmental disclosure quality,
800 firm-year observations across India's firms applied descriptive sta- and therefore, firms must pursue this concept as a strategic objective.
tistics, panel regression with random effect assumptions, and dynamic This study's outcome points to the direction that firms investment
model (GMM) to examine the study. The first findings show that the in environmental disclosure is a business strategy that guarantees
OWARE AND AWUNYO-VITOR 11

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