Cross-cultural boards and ESG disclosure

This study aims to investigate whether and how board cultural diversity influences the relationship between core board characteristics and the level of overall Environmental, Social, and Governance (ESG) disclosure, as well as its three pillars. To this end, the paper draws on a multi-theoretical framework that integrates Agency Theory, Stakeholder Theory, and Resource Dependence Theory, and uses a sample of non-financial listed companies operating in the European Union for the period 2014-2021. The resultssuggest that board cultural diversity may complement or substitute for other board attributes in improving ESG transparency. The presence of directors from diverse cultural backgrounds reinforces the positive influence of board size and gender diversity on the overall level of ESG disclosure. For social disclosure, it amplifies the positive effect of gender diversity, board size, and CEO duality, but a substitution effect emerges with respect to board independence. Furthermore, board size and board cultural diversity act in a complementary way to enhance environmental disclosure. Theoretically, this research sheds light on the interaction between board characteristics in shaping ESG disclosure behavior. The findings have practical implications for companiesinterested in appointing directors from diverse cultural backgrounds, for investors interested in assessing companies’ ability to create long-term value, and for regulators and policymakers who should promote board configurations that strategically combine different board characteristics to enhance ESG disclosure.