Explicitness of 10-K reporting on CSR-related topics and board composition.

Abstract

This paper examines the relationship between board composition characteristics, particularly board gender diversity, size, and independence level on one side, and the level of explicitness in reporting related to corporate social responsibility (CSR) on the other. For a sample of 2398 10-K forms of US firms, we conduct a textual analysis on annual reports published between April 1st, 2020, and March 31st, 2021. We identify important CSR-related topics and establish dictionaries of most indicative words for them. We then process texts with the reports to construct the measure that defines the level of explicitness. Our results confirm that companies with more women on the board tend to disclose more explicitly on CSR-related topics in general annual reports. However, board size is not significant in predicting the same measure. When controlling for additional factors, we confirm that independence level of the board has no correlation with explicitness level. Finally, we suggest some important avenues for future research in this field.