The impact of board gender diversity on ESG disclosure. A contingency perspective Open Access

Over the past 20 years, the demand for environmental, social and governance (ESG) disclosure has dramatically increased. The phenomenon is due to stakeholders’ rising concerns about the impact of economic activities on the environment and society (Zaid and Issa, 2023), a growing sensitivity to sustainable investments (Amel-Zadeh and Serafeim, 2018) as well as investors’ need to assess ESG risks and companies’ risk management policies (Solomon and Solomon, 2006).

Consistently, academic interest in ESG disclosure has increased, resulting in a growing body of studies mainly related to the determinants of ESG disclosure and governance attributes that affect this kind of reporting (Tsang et al., 2023). Literature has widely analyzed the impact of structural board characteristics – such as independence and size – (see among others: Kamaludin et al., 2022; Lavin and Montecinos-Pearce, 2021; Lagasio and Cucari, 2019; Arayssi et al., 2020; Husted and de Sousa-Filho, 2019; Iatridis, 2013; Haniffa and Cooke, 2005), as well as the demographic attributes of board members – such as gender and cultural background – on ESG disclosure (see among others: Cheung and Lai, 2023; Gallego-Álvarez and Pucheta-Martínez, 2022; Ramon-Llorens et al., 2021; Martínez‐Ferrero et al., 2021; Amorelli and García‐Sánchez, 2020; Pucheta‐Martínez et al., 2019; Manita et al., 2018; Al-Shaer and Zaman, 2016). Nevertheless, the possible interaction between these characteristics on ESG disclosure is almost unexplored. The study by Nguyen and Nguyen (2023) addresses this issue for a US sample, analyzing the effect on the overall ESG disclosure indicator without controlling the effect, at an analytical level, on social, environmental and governance disclosure. A more-grained analysis is needed as the literature suggests that board characteristics may differently affect the single components of ESG disclosure (De Masi et al., 2021; Birindelli et al., 2018).

Given the relevance of the debate around female representation on boards of directors (Manita et al., 2018), a stream of literature has focused on the effect of board gender diversity on ESG disclosure by studying different single country-focused or international settings, with mixed results. A majority of studies find a significant positive relationship (Nicolò et al., 2021; Pucheta‐Martínez et al., 2019; Khemakhem et al., 2022; Rosati and Faria, 2019; Arayssi et al., 2020; Lavin and Montecinos-Pearce, 2021; Bhatia and Marwaha, 2022; Mahmood et al., 2018). Research also points out a not significant association (Bananuka et al., 2022; Manita et al., 2018; Khan, 2010) or not significant under a critical mass of female directors (De Masi et al., 2021; Amorelli and García‐Sánchez, 2020; Fernandez‐Feijoo et al., 2014) or negative relationship (Cucari et al., 2018), leaving room for further exploration.

Literature indicates that governance attribute effectiveness is affected by the characteristics of the internal organizational environment (Boyd et al., 2011) and by cultural or institutional country-related aspects (Naghavi et al., 2021; Aguilera and Jackson, 2003). In particular, there is evidence that a country’s stakeholder orientation (García‐Sánchez et al., 2020; Alkhawaja et al., 2023) or political, economic and cultural aspects (Oliveira et al., 2018) affects the association between the presence of female directors and the disclosure of gender-related ESG practices. There is evidence that a country’s secrecy culture and religiosity, respectively, influence the effect of female directors on CSR disclosure (Temiz and Acar, 2023) and ESG decoupling (Eliwa et al., 2023). Moreover, the study by Wasiuzzaman and Subramaniam (2023), focusing on the energy sector, indicates that the level of human development results in a different relationship between board gender diversity and ESG disclosure in developed and developing countries and points out a positive and significant effect only for developed countries. Nevertheless, within developed countries, the various institutional and cultural aspects could affect the relationship between female directors and ESG disclosure and its components differently. Accordingly, recent literature recommends exploring the role of the external environment in which boards operate in studying ESG disclosure (Centinaio, 2024). The empirical evidence and the literature gap suggest that the relationship between board gender diversity and ESG disclosure should be studied at an overall as well as analytical level under a contingency view, taking into account the board environment in which female directors operate as well as country-related contextual factors.

Therefore, this paper addresses the following research question:

Drawing on upper echelon theory (UET) and resource dependency theory (RDT) from a contingency perspective, we analyze the effect on ESG disclosure of the interaction between board gender diversity and other structural and demographic board characteristics, as well as country-related cultural and institutional factors, for a sample of European nonfinancial listed firms over the period 2014–2022. We analyze the interaction of board gender diversity with board cultural diversity and board independence, as the latter is deeply rooted in corporate governance structures, regulations and good governance principles that govern a company’s decisions. We use the rule of law and gender equality, respectively, as institutional and cultural country-related contextual factors that may moderate the effect of board characteristics on a firm’s ESG commitment (Gavana et al., 2023). We derive our proxy for the extent of a firm’s ESG disclosure from Bloomberg’s ESG disclosure data, specifically the overall measure of ESG disclosure as well as measures of disclosure for single ESG components.

The European setting, as well as the period covered by our study, are of interest because of the growing engagement in ESG disclosure regulation as well as for the increasing sensitivity to the issue of board gender balance. In 2014, the EU issued the Non-Financial Reporting Directive (EP, 2014), whose scope of application will be subsequently extended by the Corporate Sustainability Reporting Directive (CSRD) (EP, 2022a). In 2012, the European legislator issued a proposal for a Directive (EC, 2012) to improve board gender diversity in listed companies, resulting in the following Directive (EU) 2022/2381 (EP, 2022b).

While the relationship between board gender diversity and ESG disclosure is widely studied, this paper adopts a contingency-based approach. It examines how the effects of female directors on ESG disclosure vary depending on internal board characteristics (such as board independence and cultural diversity) and external country-related factors (like the rule of law and gender equality). This granular focus on contextual and institutional moderators sheds light on the interaction of these factors and board gender diversity on ESG disclosure, an aspect underexplored in prior research. Moreover, this study answers the literature calls for providing a separate analysis of the single components of ESG disclosure (De Masi et al., 2021; Birindelli et al., 2018).

Therefore, the present study adds to the literature in several ways. It contributes to ESG disclosure studies by providing evidence that both internal and external contextual factors differently influence the positive effect of board gender diversity according to the specific component of ESG reporting: governance, social or environmental disclosure. Results indicate that the enforcement of law increases the effect of board gender diversity on environmental disclosure and reduces the impact on governance disclosure, while gender equality exerts the opposite effect. This study extends upper echelon research by adding insights into some internal or external contextual factors that may affect female directors’ contribution to ESG disclosure. From a resource dependency perspective, this paper highlights a substitution effect between the resources that women and independent directors provide to the board in support of the overall ESG information, and governance disclosure in particular, as well as a complementary effect of board gender and cultural diversity in improving governance, social and the overall ESG disclosure. In doing so, the study also contributes to corporate governance studies as it provides evidence that the level of ESG disclosure, as an outcome of female directors’ monitoring role and stakeholder approach, varies according to structural and other demographic board contextual aspects. It also contributes to this field of study by pointing out that the effectiveness of governance characteristics may vary according to institutional and cultural country-related contextual factors.

The remainder of the paper is structured as follows: Section 1 provides the theoretical underpinning, reviews the literature and develops the hypotheses; Section 2 presents the methodology and data; Section 3 provides the results; Section 4 discusses findings; Section 5 concludes by pointing out contributions, implications, limitations and suggestions for future studies.

Many theories have been proposed to explain corporate social and environmental disclosure, such as agency theory, legitimacy theory, RDT, resource-based view and UET. Literature on gender diversity and corporate social responsibility (CSR) indicates RDT and UET as the most suitable frameworks for analyzing the effect of board gender diversity on sustainability disclosure (Issa and Zaid, 2023). More specifically, if integrated with contingency theory, they help formulate predictions on the possible impact of contextual cultural aspects on the effect of board gender diversity on ESG disclosure.

According to UET (Hambrick and Mason, 1984; Hambrick, 2007), organizations are the reflection of their top management, firms’ behavior depends on the decisions of those who direct them and decision-makers’ interpretation of situations is consistent with their own personal point of view.

Top management teams and leadership affect a firm’s strategic direction and organizational outcomes because of the influence of their personal experiences, values and skills on the decision-making process. Boards play the role of “supra-top management teams”, exerting an active role in strategic choices (Finkelstein et al., 2009: p.277) and directors’ unique characteristics may supply the decision-making process with different perspectives (Carvajal et al., 2022). Therefore, UET provides an important theoretical framework for analyzing the effect of board gender diversity on ESG disclosure as a firm’s strategic choice (Carvajal et al., 2022).

Under the resource dependency view, female directors provide a board with peculiar characteristics aimed at increasing collaboration with external stakeholders (Harjoto et al., 2019), ESG compliance and performance (Lewellyn and Muller-Kahle, 2023; Khidmat et al., 2022) as well as disclosure (Issa and Zaid, 2023). Women tend to be sympathetic, concerned about others’ welfare (Eagly and Karau, 1991) and sensitive to environmental issues (Nadeem et al., 2020). They enrich the board with different values, ideas, skills and perspectives (Nadeem et al., 2020; Islam et al., 2022) to the benefit of CSR (Setó‐Pamies, 2015). Female directors have a different perception of their role (Manita et al., 2018) and tend to be more stakeholder-oriented whilst male directors are more shareholder-oriented (Wang et al., 2022). When women sit on a board, they tend to be actively involved in strategic issues that concern the company and its stakeholders (Nielsen and Huse, 2010). Therefore, the decision-making processes of female directors, unlike male directors, are more likely to take into account the heterogeneity of the needs of the different stakeholders (Adams et al., 2011). Board gender diversity contributes to the effective management of stakeholders as it increases stakeholder salience in the firm’s industry context and the company’s resources to also meet stakeholder needs (Zhang et al., 2013). Moreover, female and male directors differ in terms of educational background, communication style (Liao et al., 2015) and risk-taking. Indeed, female directors present a long-term orientation, are more risk-averse (Yahya et al., 2020) and more concerned about reputation loss than male directors (Srinidhi et al., 2011). Board gender diversity increases the perception of environmental risks and promotes actions to lower stakeholders’ perceived risks (Liao et al., 2015). Female directors place a lot of value on building trust in relationships and try to reduce information asymmetries with stakeholders (Wasiuzzaman and Wan Mohammad, 2020) and, under this view, they would positively affect ESG disclosure (Issa and Zaid, 2023).

Corporate governance literature points out that the link between governance practices and a firm’s outcomes is not “direct and universal” but is affected by contingencies (Aguilera et al., 2008, p. 476). Under the contingency perspective, a board’s functioning and effectiveness are strictly related to the context (Forbes and Milliken, 1999) and are affected by contextual factors at a firm level as well as at a country level (Boyd et al., 2011). The contingency framework and the related analysis of moderating effects provide a viable perspective to examine how boards affect corporate behavior (Zona et al., 2013). The implications of board diversity for organizational outcomes, in particular in terms of CSR, relate to contingent company conditions (Veltri et al., 2021). Therefore, this perspective effectively integrates RDT and UET in studying the effect of contextual factors on the relationship between board gender diversity and ESG disclosure.

The empirical literature has analyzed the effect of board gender diversity on ESG disclosure in a number of different settings. However, although the majority of studies underline a significant positive impact, results are mixed at both global and European level. In Europe, Nicolò et al. (2021) found that the presence of female directors significantly increases ESG disclosure at the overall, as well as individual, ESG score level. The result is consistent with research conducted on Spanish firms that highlight the positive effect of institutional and independent female directors on CSR reporting (Pucheta‐Martínez et al., 2019), although empirical evidence shows that female directors’ outcomes vary according to their experience and background (Ramon-Llorens et al., 2021). Conversely, Cucari et al. (2018), analyzing an Italian setting, find a negative relationship between female directors and ESG disclosure.

Research in a Canadian setting confirms a positive effect of women presence on a board as well as on a board’s committees on ESG disclosure (Khemakhem et al., 2022). Empirical evidence from the UK suggests that board diversity increases the quality of sustainability reporting (Al-Shaer and Zaman, 2016), while international empirical evidence reveals that board gender diversity favors the early adoption of Sustainable Development Goals reporting (Rosati and Faria, 2019). Other studies focusing on specific aspects of ESG disclosure find a significant positive effect of female directors on greenhouse gas information in the UK (Al-Qahtani and Elgharbawy, 2020; Tingbani et al., 2020) as well as on the level of anticorruption disclosure (Previtali and Cerchiello, 2023) and gender issues disclosure in Italy (Furlotti et al., 2019). Moreover, research in the UK reveals that board gender diversity promotes a company’s investment in effectual social engagements and related disclosure, to the benefit of a firm’s risk-taking and performance (Arayssi et al., 2020).

Other studies, based on an international (Amorelli and García‐Sánchez, 2020) and on an Italian sample (De Masi et al., 2021), suggest that female directors exert a significant impact on ESG disclosure only when they reach a critical mass. This finding is consistent with previous international research, pointing out that in countries with a higher proportion of boards with at least three female directors, the levels of CSR disclosure are higher (Fernandez‐Feijoo et al., 2014). Manita et al. (2018), focusing on the USA, find that board gender diversity does not produce a significant beneficial effect on ESG disclosure.

Research on an international setting highlights differences in the role board gender diversity plays in affecting ESG disclosure for developed and developing countries (Wasiuzzaman and Subramaniam, 2023) while studies on emerging countries show mixed results. Research conducted on Latin American firms (Lavin and Montecinos-Pearce, 2021), India (Bhatia and Marwaha, 2022), Brazil, Russia, India, China, South Africa (BRICS) (Nuhu and Alam, 2024) and the Chinese energy sector (Ma et al., 2024) reveal a significant positive effect of female directors on ESG disclosure. In line with this, Mahmood et al. (2018), studying a Pakistan setting, point out that larger boards with a strong presence of female directors improve sustainability-related decision-making as well as sustainability disclosure. Empirical evidence from Malaysia indicates that female directors increase ESG disclosure transparency (Zahid et al., 2020) with different effects on ESG disclosure (Wasiuzzaman and Wan Mohammad, 2020), whilst studies on companies operating in Uganda (Bananuka et al., 2022) and Bangladesh (Khan, 2010) find a nonsignificant effect.

The inconsistent results evidenced by the literature suggest that the effect women can have in terms of ESG disclosure might be moderated by contextual factors that may facilitate or inhibit women’s contribution. Consistently, there is evidence that women more effectively reduce impression management in sustainability reporting in more stakeholder-oriented countries than in shareholders-oriented settings (García-Sánchez et al., 2019). A stream of literature focused on board gender diversity and the disclosure of gender issues has analyzed certain country-level contextual factors, finding significant moderating effects. Analyzing an international sample across America, Europe and Asia, García‐Sánchez et al. (2020) found that country-level factors related to stakeholder orientation increase the positive effect of female directors on the voluntary disclosure of gender issues. Oliveira et al. (2018), investigating the effect of political, financial, educational, cultural and economic country-level factors, provide evidence that some country-contextual factors moderate the relationship between the presence of female directors and the disclosure of gender-related ESG practices. The recent study by Temiz and Acar (2023) indicates that board gender diversity reduces the lowering effect of secrecy culture on CSR reporting.

According to resource dependence theory, cultural diversity has a positive effect on the quality of board monitoring and a diverse board may increase a company’s ability to secure crucial resources located outside the organization and be critical in meeting stakeholders’ expectations (Ullah et al., 2020).

Research on the effect of board diversity on a company’s commitment to sustainability issues finds that board cultural diversity increases social and environmental performance (Martínez‐Ferrero et al., 2021; Cheung and Lai, 2023), and, as a consequence, stakeholder engagement (Gangi et al., 2023) indicating that this feature increases the sensitivity of the board toward ESG issues. Board cultural diversity increases CSR disclosure (Gallego-Álvarez and Pucheta-Martínez, 2022) and mediates the positive relationship between CSR performance and CSR disclosure quality (Cormier et al., 2022).

Literature suggests that more culturally diverse boards are subject to the pressure of a wider range of stakeholders, are more attentive to CSR reporting (El-Bassiouny and El-Bassiouny, 2019) and are particularly prone to understanding their expectations and adopting strategies to align the interests of different types of stakeholders (Harjoto et al. 2015) . Cultural diversity leads to a heterogeneity of views, improving a team’s decision-making process (Nederveen Pieterse et al., 2013). There is also evidence that diversity in nationality and ethnicity increases a group’s degree of cooperation in complex duties (Watson et al., 1993). At the board of directors’ level, cultural diversity may reduce stereotyping and group thinking in the boardroom (Harjoto et al., 2019), creating an open-minded context (Martínez‐Ferrero et al., 2021) that values different perspectives, allowing women to be effective upper echelons and not mere tokens on the board. Female directors, because of their peculiar personal traits (Liao et al., 2019), are more prone to disclose environmental and social information to meet stakeholder expectations (Rao and Tilt, 2016) and a more culturally diverse context may allow them to exert a stronger effect on a firm’s decisions related to ESG disclosure:

Independent directors are appointed to the board to monitor management’s decision-making processes and are not affiliated with the company or its employees (Fama and Jensen, 1983). Board independence is one of the main characteristics of board structural diversity (Adams et al., 2015), and literature provides empirical evidence of its effect on ESG disclosure. A very limited number of studies (Haniffa and Cooke, 2005; Esa and Anum Mohd Ghazali, 2012) analyzing the Malaysian context have found a negative relationship between board independence and ESG disclosure. They argue, on the one hand, that independent directors may lack the necessary knowledge of the business and its stakeholders’ information needs and, on the other hand, that they are primarily focused on shareholders’ expectations. The majority of empirical research points out that independent directors positively affect ESG disclosure (Lavin and Montecinos-Pearce, 2021; Lagasio and Cucari, 2019; Arayssi et al., 2020; Husted and de Sousa-Filho, 2019; Iatridis, 2013). Independent directors exert pressure on top management teams to the benefit of ESG disclosure (Kamaludin et al., 2022) as they present a long-term orientation, are less concerned about short-term financial performance (Ibrahim and Angelidis, 1995) and are particularly interested in reputational returns (Mallin et al., 2013). There is also evidence that board independence favors board gender diversity (Halliday et al., 2021). Independent directors provide the board with a variety of independent thinking, reducing the effect of groupthink (Fuzi et al., 2016) and, therefore, creating a context where different feminine thinking and long-term orientation can be more effective:

According to literature, organizations are open systems and boardroom structure and efficacy depend on contingencies related to the environment in which the firm operates (Aguilera et al., 2008). Country-related factors may play a relevant role, and empirical literature has pointed out the effect of gender equality and the rule of law, respectively, on financial (Belaounia et al., 2020) and corporate social outcomes (Gavana et al., 2023).

According to the European Institute for Gender Equality ^[1], gender equality is based on the concept that “women’s and men’s rights, responsibilities, and opportunities will not depend on whether they are born female or male. Gender equality implies that the interests, needs, and priorities of both women and men are taken into consideration, thereby recognizing the diversity of different groups of women and men”. This implies that a country’s level of gender equality may moderate board gender diversity effectiveness on ESG disclosure by increasing the quality of female directors as well as of boardroom’s dynamics (Belaounia et al., 2020).

In countries with a higher gender quality index, women rely on better educational and professional opportunities, they may develop the set of skills necessary to sit on the board, be self-confident in carrying forward their ideas and values (Alves, 2023) and reach a critical mass necessary to be effective (Torchia et al., 2011). This also implies that female directors are likely to develop the appropriate wealth of knowledge and professional experience to provide a relevant contribution to the board as well as a greater legitimacy in sitting on it (Halliday et al., 2021). Conversely, in countries characterized by a lower gender equality index, women are more likely to be co-opted onto boards as a response to legislative or internal pressures and not based on their professional characteristics and experiences (Belaounia et al., 2020), and they play a formal role without providing a substantial contribution to the board’s activity.

In countries characterized by higher gender equality, gender biases are lower (Glick et al., 2004), work groups are more prone to take advantage of the availability of a diverse pool of perspectives and resources and, reducing the negative effects of social categorization (Schneid et al., 2015), female directors can translate their potential into action:

Literature suggests that the same rules or directives may result in different outcomes for different countries (Pejovich, 2006) depending on how operators perceive and follow those rules. The rule of law is a relevant factor in determining the aforementioned differences across countries (Goltz et al., 2015). According to Kaufmann et al. (2010, p. 6), the rule of law expresses “the extent to which agents have confidence in and abide by the rules of society, and in particular the quality of contract enforcement, property rights, the police and judiciary”. The enforcement of law expresses the actual level of protection enjoyed by a firm’s stakeholders, as it indicates the probability that stakeholders’ de jure protection results in a stakeholder’s de facto protection (Gavana et al., 2023). The rule of law acts as a coercive mechanism in the context of organizations (Roy and Mukherjee, 2022). Literature suggests that the institutional pressure exerted by the rule of law pushes top management to favor shareholder care and communication to the detriment of ESG communication (El Khoury et al., 2023). Nevertheless, the rule of law helps mitigate gender discrimination (Barajas-Sandoval et al., 2023), and there is evidence that, in countries characterized by higher levels of law enforcement, women play more prominent roles in businesses (Goltz et al., 2015; Fang et al., 2022). Therefore, female directors are more likely to play a substantial role in countries with a high enforcement of law, effectively expressing the diverse values and experiences they bring to the board. Furthermore, the institutional pressure of the rule of law stimulates upper echelon attention toward stakeholders. Female directors, compared to male directors, are more attentive to stakeholders other than shareholders (Wang et al., 2022), are more risk averse and present a longer-term orientation (Yahya et al., 2020), therefore we expect that, under the pressure of law enforcement, they would increase ESG disclosure:

The database consists of nonfinancial firms listed on EU exchanges in the period 2014–2022. The initial sample was created using the information provided by Bloomberg’s ESG disclosure data for listed nonfinancial firms with available ESG disclosure. In the second step, we removed observations with missing data for the disclosure scores and the other variables. After carrying out this step, the final sample consisted of 1,935 firm-years observations. Table 1 provides the sample breakdown by country and by year.

Two authors hand-collected the data on board gender diversity (BGD), Chief Executive Officer (CEO) duality, board independence (BI) and board cultural diversity (BCD) from the firm’s corporate governance reports. We used nationality as a proxy for culture and identified culturally diverse directors as those whose nationality is different from the location of the corporate headquarters. We used this proxy as an objective criterion that ensured homogeneity in coding by the two coders. For companies not disclosing directors’ nationality, we gathered the information from the curricula available on a company’s website and LinkedIn. The balance sheet data are from the Orbis Bureau van Dijk database. The ESG disclosure scores were derived from the Bloomberg database.

This research examines the effect of board gender diversity on ESG disclosure in EU countries. To this end, we analyze the relationship using as dependent variables the global sustainability disclosure score (ESG) and the disaggregated environmental (ENV), governance (GOV) and social (SOC) disclosure scores. We selected the Bloomberg ESG scores as they provide a metric of the disclosure level of each firm useful for studies focused on the determinants of ESG reporting (Baldini et al., 2018). To control for the differences due to the industrial composition all firm’s scores are calculated net of the industry mean scores.

Table 2 reports the dependent, independent and control variables used in this study. BGD proxies for board gender diversity as the weight of female directors on the board may affect the firm’s ESG disclosure (De Masi et al., 2021; Khemakhem et al., 2022; Nicolò et al., 2021; Pucheta‐Martínez et al., 2019). BS and CEOD proxy for board characteristics in terms of board size (BS) and CEO duality, as they may significantly affect ESG disclosure (Husted and de Sousa-Filho, 2019). Consistently with Martínez‐Ferrero et al. (2021, p. 679), we define board cultural diversity as “the percentage of board members that have a cultural background different from the location of corporate headquarters”. BI proxies for board structural diversity in terms of the weight of independent directors (Iatridis, 2013). GEQ proxies for a country’s level of gender equality (GEQ) as there is evidence that this cultural aspect may affect female directors’ efficacy (Belaounia et al., 2020). The Rule of Law (ROL) is a proxy for the enforcement of law as a country-related aspect that may affect a firm’s CSR behavior (Gavana et al., 2023).

We control for performance (ROA), leverage (GEA), firm size (SIZE) and age (AGE). Finally, we use dummy variables to take into account for possible year (Y), industry (I) and country (C) effects.

To estimate the impact of board gender diversity on ESG disclosure in European countries, we use the following base model:

We also estimate an augmented model to verify the interaction effects of gender equality, rule of law and board cultural and structural diversity on the relationship between board gender diversity and sustainability disclosure:

We estimated models (1) and (2) using ordinary least-squares (OLS) regressions with standard errors clustered at the firm level. The inclusion of dummies in the models and the clustering is necessary to mitigate potential endogeneity issues arising from omitted variable bias or reverse causality and to control for unobserved heterogeneity across firms, industries, countries and time periods. Finally, to verify the robustness of the results and to mitigate concerns about the reliability of the results due to possible endogeneity threats related to simultaneity or reverse causality biases we reestimated models (1) and (2) using lagged explanatory variables (Li, 2016; Wasiuzzaman and Subramaniam, 2023) and 2SLS (Angrist and Krueger, 2001).

Table 3 summarizes the descriptive statistics for ESG disclosure scores and independent and control variables. The ESG global score varied from 0.04 (minimum) to 0.836 (maximum), with a mean of 0.425 and a median score of 0.431. Board gender diversity ranges from 0.005 to 0.997.

Table 4 shows the bivariate correlations between dependent and explanatory variables. Only the correlations between the global ESG score and the three environmental, social and governance pillars assume high values, but this is only to be expected. Furthermore, the correlations between independent variables, thus multicollinearity effects, appear not to pose problems with the reliability of the estimated parameters. Influence diagnostics do not show problematic outliers in the sample.

Table 4 presents the results of models (1) and (2), showing the impact of board gender diversity on firms’ ESG scores. In particular, the first four columns report the results of model (1), estimating the impact of board gender diversity on the sustainability disclosure of the EU firms. The following four columns show the results of model (2) with the same set of variables, also taking into account the possible interaction effects of board cultural diversity and board independence (hypotheses H1a–H1b) and that of gender equality and the rule of law (hypotheses H2a–H2b). The coefficients in Table 5 show a highly significant interaction effect of board independence on the relationship between board gender diversity and GOVD, confirming H1a for governance disclosure. We also find a significant interaction effect of board cultural diversity on the relationship between board gender diversity and the ESGD, GOVD and SOCD scores, and we accept hypothesis H1b. Rule of law and gender equality show significant interaction effects on the relationship of board gender diversity with the GOVD and ENVD scores, confirming hypotheses H2a and H2b for governance and environmental disclosure.

To verify the robustness of the results, we rerun the previous models with one-year lagged explanatory variables and reported the results in Table 6. The value and significance of the coefficients confirm overall the inferences drawn previously.

Finally, as a further check to address possible endogeneity problems due to omitted variables and simultaneity biases, we reestimate our models using 2SLS with lagged variables as instruments. The results reported in Table 7 are consistent with our earlier findings and the main predictions of the hypotheses.

This study addresses whether board and country-related institutional and cultural factors moderate the relationship between board gender diversity and ESG disclosure in a European setting The setting is of particular interest as previous research provided nonhomogenous results on the relation between board gender diversity and ESG disclosure, and given the very recent implementation of the CSRD and the establishment of the European Sustainability Reporting Standards (ESRS).

In line with a large part of the empirical literature, our findings point out that board gender diversity positively affects ESG disclosure (Khemakhem et al., 2022; Nicolò et al., 2021; Ramon-Llorens et al., 2021; Pucheta‐Martínez et al., 2019). We find that board gender diversity positively affects ESG disclosure on a synthetic as well as analytical level. This result is consistent with the view that female directors are particularly sensitive to the interests of the weakest stakeholders (Francoeur et al., 2019) and among them also minority shareholders (Nekhili et al., 2022), favoring the disclosure of social, environmental and governance aspects.

Consistent with the literature (Al Amosh and Khatib, 2022; Lavin and Montecinos-Pearce, 2021; Arayssi et al., 2020; Chouaibi et al., 2022; Al Amosh and Khatib, 2022), our results indicate that board independence exerts a significant positive effect on ESG disclosure as it improves ESG disclosure as well as governance, social and environmental disclosure as single ESG components. The findings also point out that the female beneficial effect on ESG information is, overall, negatively related to the level of board independence, and, at an analytical level, the effect is significant for governance disclosure. Our evidence suggests a substitution effect between board independence and board gender diversity in affecting ESG and governance disclosure. Female directors exert an effective monitoring role (Zalata et al., 2019) to the benefit of stakeholders. An increase in board gender diversity may function as an alternative mechanism to an independent board to improve ESG disclosure.

Our results indicate that board cultural diversity exerts a positive and significant effect on ESG disclosure as well as on its social and governance components. This evidence is consistent with the view that more culturally diverse boards are particularly sensitive to ESG issues and present better nonfinancial performance (Yilmaz et al., 2021; Ouyang et al., 2022; Cormier et al., 2022; Martínez‐Ferrero et al., 2021). Our findings indicate that the positive impact of female directors on ESG disclosure increases when they sit on a culturally diverse board, suggesting that these board demographic characteristics complement each other in improving ESG information. Looking at the single component of ESG, the effect is significant for social and governance disclosure: cultural diversity, on the one hand, provides heterogeneous human and social capital and, on the other hand, improves corporate governance practices (Yilmaz et al., 2021), effectively complementing board gender diversity in improving these types of disclosure.

We find that companies located in countries characterized by a higher level of gender equality are not significantly more prone to disclose ESG information compared to firms operating in the same industry in other EU countries. As for the contingent effect of gender equality on the relationship between board gender diversity and ESG disclosure, the results point out that the impact at the ESG synthetic level is not significant but that the effect differs according to different ESG components. The positive effect of board gender diversity on environmental disclosure is weaker in more gender-equal countries, where the beneficial gender effect is stronger on governance disclosure and does not change on social disclosure. This counterintuitive result may be explained in terms of the different roles played by female directors across countries with a different level of gender equality. The gender stereotypes affecting certain institutional contexts may significantly influence the role women might play at a board level (Halliday et al., 2021). Women appointed to board committees tend to be affected by feminine stereotypes so that female directors are called to address “softer” issues such as CSR, public affairs and stakeholder communication, while men tend to be appointed to executive, finance and compensation committees (Boulouta, 2013; Zelechowski and Bilimoria, 2006). On the one hand, gender equality improves female opportunities to access tertiary education, lowering men’s reluctance to accept women in executive careers (Grosvold et al., 2016). On the other hand, there is evidence that the role of women in upper-echelon positions evolves over time and along with cultural change in society. Consistent with a gender equality increase in the 1990s for the USA (Propel HR, 2022), Peterson and Philpot (2007), studying female directors’ roles on US Fortune 500 boards, find that women increased their presence in key committees compared to the results derived by Kesner (1988) from a sample of Fortune 500 companies for the year 1983. In more gender-equal countries, women are more likely to act in executive, finance, audit and compensation committees than in countries where gender equality is weaker. There is evidence that female directors operating in the audit committee increase the quality of communication with shareholders (Pucheta‐Martínez et al., 2016; Oradi and Izadi, 2020). Moreover, gender-diverse compensation committees tend to strengthen the link between top managers’ pay and financial performance (Usman et al., 2018; Usman et al., 2021). Therefore, although further investigation of the effect we point out is needed, our results suggest that where gender equality is higher, female directors might be more concerned for shareholders’ needs because of their roles in key board committees and not mainly focused on societal and environmental issues, reducing the positive effect of board gender diversity on environmental disclosure to the benefit of governance disclosure.

Our results emphasize that, overall, firms located in countries characterized by a high level of the rule of law present a lower ESG disclosure compared to their competitors operating in environments with lower enforcement. Literature indicates that the enforcement of law tends to increase financial performance as it is likely to raise the pressure for minority shareholder protection (van Essen et al., 2015) to the detriment of ESG performance (Gavana et al., 2023). Therefore, this institutional characteristic may favor the commitment to financial communication and, more in general, to the disclosure of issues that may directly affect shareholders’ interests. In doing so, it may lower social and environmental disclosure, as pointed out by our findings. Furthermore, our results indicate that in a context characterized by high law enforcement, the level of board gender diversity makes the difference: it significantly increases environmental disclosure but tends to lower the level of disclosure of governance-related issues. These results support the view that increasing female influence on the board improves the salience of different stakeholders (Francoeur et al., 2019) when the institutional environment places strong protections on shareholders.

The results on how country-level factors, such as the rule of law and gender equality, moderate the relationship between board gender diversity and ESG disclosure is even more relevant under the CSRD and ESRS framework, which applies uniformly across EU member states. However, enforcement and interpretation of the ESRS can vary depending on a country’s institutional quality and legal framework. The paper’s finding that the rule of law enhances environmental disclosure but may reduce governance disclosure suggests that countries with stronger enforcement mechanisms might push firms to focus more on environmental compliance under CSRD guidelines, where strict rules about emissions and sustainability impact reporting are key. Conversely, in gender-equal environments, the emphasis on governance could lead firms to highlight governance reforms in their sustainability reports to meet the governance criteria of the ESRS.

Finally, our findings, taken together, suggest that the moderating effect of internal and country-related contextual aspects is not homogeneous for all the ESG disclosure components. These findings support the literature suggestion (De Masi et al., 2021; Birindelli et al., 2018) that research should analyze the effect of the variables on the individual ESG components as the effect could manifest itself differently depending on whether the focus is on governance, social or environmental aspects.

This study investigates the relationship between board gender diversity and ESG disclosure under a contingency perspective. The paper analyzes ESG disclosure in its component parts: governance, social and environmental reporting for a sample of European nonfinancial listed firms over the period 2014–2022.

This study contributes significantly to the literature on board diversity and ESG disclosure by providing a nuanced understanding of how board gender diversity interacts with internal board characteristics and country-specific institutional factors to influence ESG disclosure. Unlike previous studies that predominantly examine board gender diversity’s effects in isolation, this paper adopts a contingency perspective, highlighting how board independence, cultural diversity, rule of law and gender equality shape the impact of female directors on ESG disclosure. Furthermore, the study distinguishes between the specific components of ESG disclosure – environmental, social and governance – uncovering critical differences in how gender diversity affects each aspect. This fine-grained analysis deepens our understanding of contextual moderators, addressing an important gap in the current literature. From the theoretical point of view, it contributes to upper echelon literature by providing evidence, in line with contingency theory, that the effect of board gender diversity on ESG disclosure varies according to firms’ internal as well as institutional and cultural contextual factors. From a resource dependency perspective, this research provides evidence that female directors bring resources to the board that may substitute independent directors’ contributions to ESG and governance disclosure or co-occur with board cultural diversity, leveraging the value of diversity to the benefit of ESG, governance and social disclosure. These findings add to corporate governance literature by suggesting that the monitoring activity female directors exert to the benefit of stakeholders varies according to board demographic and structural attributes, resulting in different effects on ESG disclosure. It also contributes to this body of literature by adding insights to the debate on “whether” and “under which condition” female directors may be effective (Naghavi et al., 2021), as it points out the role of institutional and cultural country-related factors in the impact of board gender diversity on ESG disclosure.

The present study contributes to ESG disclosure research by pointing out that contextual aspects may differently interact with the relationship between board gender diversity and governance and social and environmental disclosure. Findings show that the enforcement of law increases the positive effect of board gender diversity on environmental disclosure and reduces the impact on governance disclosure. Conversely, a more gender-equal context enhances female director engagement in supporting governance disclosure, lowering the effect on environmental information.

Our findings have implications for companies as they indicate that board gender diversity is a signal of commitment to ESG transparency, especially for environmental issues, when a firm operates in a context characterized by a high enforcement of law or a low level of gender equality. Moreover, the results have implications for companies as they suggest that the positive influence of female directors in dialogues with stakeholders varies according to the board configuration in terms of cultural diversity and level of independence. This implies that companies should not only focus on gender diversity but also ensure a balanced mix of cultural diversity and board independence to enhance ESG reporting. The study’s results indicate that cultural diversity amplifies the positive effects of female directors on governance and social disclosures, suggesting that firms should prioritize diversity across multiple dimensions to strengthen their sustainability reporting.

These findings have implications for companies also in terms of risk management as they provide information on the board environment that can improve ESG commitment to avoid ESG controversies detrimental to financial performance (Nirino et al., 2021).

Our results also suggest that companies operating in countries with strong rules of law should capitalize on female directors’ ability to drive environmental disclosure, as the findings show that law enforcement enhances the impact of female directors on environmental disclosure.

These results are also relevant for investors as ESG reporting is a key source of information in assessing ESG risks and, more generally, a firm’s risk management policies (Solomon and Solomon, 2006) as it provides information about corporate practices that can significantly influence long-term sustainability and risk. A board that promotes transparent and comprehensive ESG disclosure can indicate careful management of nonfinancial risks, thereby reducing potential risks to investors. In particular, these results are of interest to environmentally and socially responsible investors as they indicate interactions between board attributes that may signal a proactive attitude of the company in complying with ESG regulation. Moreover, investors should take into account that country-specific factors influence the relationship between board gender diversity and ESG disclosure. In particular, they should consider that board gender diversity might signal a high environmental sensitivity for firms operating in strong rule of law environments. Tailoring investment decisions to contextual differences can yield better long-term results in sustainability-focused portfolios.

These findings are useful for policymakers to recommend best practices regarding board composition. Policymakers should extend beyond simple gender quotas and consider encouraging firms to adopt broader diversity measures, including cultural diversity. This study shows that complementary forms of diversity enhance female directors’ impact on ESG reporting, suggesting that inclusive diversity policies would be more effective in improving corporate transparency.

The results of this study also help regulators as they point out that the level of board gender diversity differently affects governance, social and environmental disclosure according to a country’s rule of law and level of gender equality. Therefore, legislative interventions to improve ESG disclosure should take into account country-contextual aspects, as regulation may not be effective without first analyzing the institutional and cultural context. As regulators enforce the ESG disclosure, they should consider offering country-specific guidelines that address institutional and cultural differences. Such guidance could help companies optimize their ESG strategies and disclosures, ensuring regulatory frameworks are applied effectively across different national contexts.

This explorative study presents limitations that might be addressed by future research. We aimed to verify the possible interaction of contextual factors on the relationship between board gender diversity and environmental, social as well as governance disclosure, focusing only on 15 out of 27 EU countries. In doing so, we took into consideration only board cultural diversity and board independence as board contextual characteristics, the rule of law and the level of gender equality as country-related institutional and cultural contingent aspects. Future research may study the relationship by focusing on the interaction of various diversity sources of the board: age, education, tenure, different ESG issue expertise and interlocks. Future studies may also extend the analyses to the other EU countries, particularly those from the CEE region, to capture the contextual factors that may affect the implementation of the CSRD and the application of the ESRS. Research could also study extra-EU countries adding other relevant institutional and cultural country-related aspects. As for institutional aspects, it could be of interest to take into account ESG disclosure regulation and the efficiency of the judicial system. Scholars may widen the analyses of the interaction of national culture with board gender diversity, also controlling for the effect of power distance, individualism vs collectivism, uncertainty avoidance, short-term vs long-term orientation, masculinity vs femininity, indulgence vs restraint (Hofstede, 1984), as these aspects have been explored only as determinants of ESG disclosure (Lu and Wang, 2021; Nicolò et al., 2024; Hassanein et al., 2024) or moderators in the relation between ESG information and financial performance (Wasiuzzaman et al., 2023) but not in their interaction with board gender diversity.