The impact of boardroom internationalisation on online disclosures of S&P 500

Shehadeh, Esam, Aly, Doaa A ORCID: 0000-0002-2037-6879 and Yousef, Ibrahim (2021) The impact of boardroom internationalisation on online disclosures of S&P 500. Journal of Financial Reporting and Accounting, 19 (4). pp. 596-614. doi:10.1108/JFRA-07-2020-0186

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9384 Aly, D. (2020) The-Impact-of-Boardroom-Internationalisation-on-Online-Disclosures-of-S-and-P-500.pdf - Accepted Version
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Purpose The purpose of this study is to analyse the level of online disclosure of firms in the USA and to evaluate the impact of diversity in terms of director nationality (boardroom internationalisation) on online disclosure. Design/methodology/approach The authors apply, for the first time, a new modified scoring system to measure online disclosure levels by securing more detailed information on each of the items in the voluntary disclosure index. Regarding the percentage of foreign board members, unlike in previous research, the authors calculate two additional proxies to more accurately specify the level of international diversity on the board: the Blau Index and the Shannon Index. Moreover, the authors use a cross-sectional model for the sampled non-financial S&P500 firms using both ordinary least squares (OLS) and heteroskedasticity-corrected estimates to analyse the impact of boardroom internationalisation on the level of online disclosure. Findings The findings reveal that the average online disclosure level for the sample in question is 64% for the 0-1 index and 57% for the 0-4 index. In addition, the results of the regression analysis confirm the study's proposed hypothesis, which is that the presence of international board members correlates with an improvement in the level of online disclosure. This can be attributed to the fact that foreign directors bring unique skills and knowledge from their home countries and thus, increase board discussion, creativity and innovation, which has a positive impact on the level of online disclosure. Research limitations/implications Financial firms are subject to capital requirement regulations; consequently, disclosure practices can be influenced. Therefore, these firms were excluded from the sample of the study. Originality/value This research contributes to the body of literature on nationality diversity of firm boards and corporate online disclosure in several respects. Firstly, the study adds an international dimension to the existing literature. Secondly, this study provides new evidence that foreign diversity on the board can improve firm value, insofar as the corresponding enhancement of online disclosure leading to positive capital market implications. Thirdly, the authors use, for the first time, a new scoring system approach to measure the level of online disclosure. Finally, it contributes to the corporate governance literature by basing its analysis on a multi-theoretical approach.

Item Type: Article
Article Type: Article
Uncontrolled Keywords: Online disclosure; Foreign board member; Boardroom; Corporate governance; Corporate website
Subjects: H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG4501 Investment, capital formation, speculation
Divisions: Schools and Research Institutes > School of Business, Computing and Social Sciences
Research Priority Areas: Applied Business & Technology
Depositing User: Susan Turner
Date Deposited: 23 Mar 2021 07:39
Last Modified: 31 Jul 2023 09:49

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