This study aims to investigate the moderating effect of independent directors on the relationship between politicians on the board and corporate social responsibility disclosure (CSRD).
The ordinary least square has been used to analyze the CSRD data collected from the annual reports of all 30 listed banks of Bangladesh covering six years period ranging from 2013–2018. Further, the study has applied the generalized method of moments to prove the robustness of the model across the endogeneity issue.
The study found a positive relationship between board independence and CSRD that indicates board independence enhances the CSRD to a great extent. On the contrary, the inclusion of politicians on the board has shown a negative impact on CSRD that implies the higher the presence of political members on the board of a bank, the lower the involvement of the bank in CSR activities. However, board independence positively and significantly moderates the politician directors on the CSRD. The findings imply that if the independent directors are empowered, they play the role of whistleblowers that, in turn, mitigates the negative role of politician directors to CSRD.
The study suggests the banks’ management, and regulatory bodies formulate sound policies so that the banks are forced to include more independent directors with enough power and at the same time, reduce the politician directors on the board.
The study extends debate on the political CSR and CSRD through validating the role of board independence.
