The influence of corporate governance characteristics on the readability of corporate social responsibility reports written in Spanish language

Abstract

As it is the board of directors which is responsible for non-financial information, this article analyses the influence of several characteristics of boards of directors (board size, the proportion of independent directors and the proportion of female directors) on the readability of Corporate Social Responsibility (CSR) reports written in Spanish. It also considers the effect on CSR readability of the hard regulation (law 18/2017 of 24 November 2017) of non-financial information in Spain and the type of reports used (Integrated Reports vs. Management Reports, Annual Reports, Sustainability or CSR reports). The study was carried out on 235 observations of CSR sustainability reports of Spanish listed companies from 2015 to 2019 using the Fernandez-Huerta Formula for Spanish language readability. Findings suggest that board of directors characteristics affect CSR report readability. The proportion of independent directors negatively affects the readability index, while the proportion of women on boards affects it positively. Moreover, readability is unaffected when disclosure of non-financial information is required by law, but it is positively affected when CSR issues are presented in an integrated report. The existence of a CSR committee negatively affects the readability index.