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Institutional environment and environmental, social and governance accounting among banks in West Africa

Institutional environment and environmental, social and governance accounting among banks in West... This study investigated the influence of institutional environment on the environmental, social and governance (ESG) accounting practices of banks in West Africa. The purpose of this study is to examine whether the size of an economy and the governance structure of a country is relevant for ESG accounting practice.Design/methodology/approachThe study applied content analysis on 602 annual reports of 67 banks in 5 countries in West Africa. A generalised method of moments (GMM) estimation technique was used for the regression analysis.FindingsThe evidence showed that GDP has a positive and insignificant relationship with ESG reporting, suggesting that the size of an economy is not relevant for ESG accounting. The study further found that Corruption Perception Index has a positive and significant relationship with ESG accounting. This result implies that a country’s political environment is germane for ESG accounting. Firm-specific factors, such as firms’ size, value and age have positive and significant relationships with ESG accounting while net profit margin and leverage have negative relationships with ESG accounting. The study concludes that a country’s institutional environment influences the ESG accounting practices of its firms.Practical implicationsThe governments of countries in West Africa must lay an enabling political and economic foundation to improve the accounting practices of firms, which is a critical factor for attracting investments.Originality/valueThe study contributes to the ESG accounting literature in developing countries which is found to be scarce. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Meditari Accountancy Research Emerald Publishing

Institutional environment and environmental, social and governance accounting among banks in West Africa

Maama, Haruna
Meditari Accountancy Research , Volume 29 (6): 23 – Nov 25, 2021
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References (66)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2049-372X
eISSN
2049-372X
DOI
10.1108/medar-02-2020-0770
Publisher site
See Article on Publisher Site

Abstract

This study investigated the influence of institutional environment on the environmental, social and governance (ESG) accounting practices of banks in West Africa. The purpose of this study is to examine whether the size of an economy and the governance structure of a country is relevant for ESG accounting practice.Design/methodology/approachThe study applied content analysis on 602 annual reports of 67 banks in 5 countries in West Africa. A generalised method of moments (GMM) estimation technique was used for the regression analysis.FindingsThe evidence showed that GDP has a positive and insignificant relationship with ESG reporting, suggesting that the size of an economy is not relevant for ESG accounting. The study further found that Corruption Perception Index has a positive and significant relationship with ESG accounting. This result implies that a country’s political environment is germane for ESG accounting. Firm-specific factors, such as firms’ size, value and age have positive and significant relationships with ESG accounting while net profit margin and leverage have negative relationships with ESG accounting. The study concludes that a country’s institutional environment influences the ESG accounting practices of its firms.Practical implicationsThe governments of countries in West Africa must lay an enabling political and economic foundation to improve the accounting practices of firms, which is a critical factor for attracting investments.Originality/valueThe study contributes to the ESG accounting literature in developing countries which is found to be scarce.

Journal

Meditari Accountancy Research – Emerald Publishing

Published: Nov 25, 2021

Keywords: Institutional theory; West Africa; Social accounting; Institutional environment; Environmental accounting

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