Audit Committee Leadership Attributes and CSR Reporting: Evidence from Jordan

Abstract

Even though audit committee (AC) characteristics and corporate social responsibility (CSR) relationship has long been well investigated, scarce research on committee leadership is observed in the literature. Considering the growing emphasis on the potential role of the audit committee chair (ACC) on financial and non-financial reporting, the current study aims to fill this literature gap by analyzing the influence of ACC characteristics on the level of CSR. Using a Jordanian sample of 475 firm-year observations over the period 2014 to 2018, this study employs content analysis to quantify CSR disclosure and ordinary least squares (OLS) regression to test the proposed hypotheses. The study findings show that ACC independence, legal expertise, and education level are positively and significantly associated with CSR reporting. However, ACC age has a significant inverse relationship with CSR reporting, suggesting that older ACC perform more poorly in a committee function. Importantly, ACC tenure and financial expertise have an insignificant relationship with CSR reporting. These findings are robust under a battery of sensitive tests such as employing OLS with robust standard errors and using alternative measurements of ACC features. The sub-sample analysis results also show that ACC characteristics predominantly enhance CSR reporting in large firms but not in small firms, implying that firm size strengthens the relationship between ACC characteristics and CSR reporting. The current study provides new evidence of the significant role of ACC on non-financial reporting in an emerging economy, Jordan. Policymakers, researchers, and stakeholders may benefit from these results in recognizing the potential role of ACC in advancing CSR reporting.