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The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures

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Abstract

This study examines the effect of directors’ human and social capital (i.e. board capital) on the level of corporate social responsibility (CSR) disclosures by drawing on insights from a resource-based view. It also investigates the effect of chief executive officer (CEO) power on this relationship. Data were obtained from annual reports of companies listed on the Dhaka Stock Exchange in Bangladesh from 2005 to 2013. We employ outside directors’ experiences and expertise as a proxy for board capital and measure CEO power using a ‘power index’ that comprises CEO duality, ownership, tenure and family CEO status. Results show that board capital is positively associated with CSR disclosure levels; however, CEO power is negatively associated with CSR disclosures and reduces the effect of board capital on CSR disclosures. Thus, we conclude that although board capital can improve CSR practices, CEO power can also inhibit these practices.

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Notes

  1. Jeremias and Gani (2014) define board dependence as the number of inside directors divided by the total number of directors on the board.

  2. The United States of America announced the suspension of United States trade privileges for Bangladesh in June 2013 following concerns relating to labour rights and workers’ safety (Washington Post 2013).

  3. We use the panel least square regression technique.

  4. For example, Mr K. M. Masud Siddiqui, the secretary of the Ministry of Industries, was appointed as an independent director on the board of the British American Tobacco Company Bangladesh Limited in 2010. Dr Mijanur Rahman, the Vice Chancellor of Jagganath University, was appointed as an independent director on the board of Maksons Spinning Mills Limited in 2013. Mr M. Azizul Huq, the managing director of GlaxoSmithKline (GSK) Bangladesh Limited, was appointed as an independent director of Berger Paints Bangladesh Limited in 2012.

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Authors and Affiliations

  1. Department of Accounting, Deakin Business School, Deakin University, 221 Burwood Highway, Burwood, VIC, 3125, Australia

    Mohammad Badrul Muttakin, Arifur Khan & Dessalegn Getie Mihret

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  1. Mohammad Badrul Muttakin
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  2. Arifur Khan
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  3. Dessalegn Getie Mihret
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Correspondence to Arifur Khan.

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Table 8 Variable definition
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Muttakin, M.B., Khan, A. & Mihret, D.G. The Effect of Board Capital and CEO Power on Corporate Social Responsibility Disclosures. J Bus Ethics 150, 41–56 (2018). https://doi.org/10.1007/s10551-016-3105-y

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