“Do sustainability reporting conduct and corporate governance attributes relate? Empirical evidence from China”

Adopting agency and stakeholders theories, this study aims to investigate the relation- ship between corporate governance attributes (board size, board independence, female directors, and CEO duality) and sustainability reporting conduct in China. The empirical analysis is based on a sample of 10,330 firm-year observations of Chinese listed companies over the period from 2015 to 2018. Data are supplied by WIND and CSMAR databases, whilst regression analysis is applied to test the hypotheses. Results indicate that board size and board independence were found to be positively associated with the sustainability reporting conduct, while female directors and CEO duality both do not have a significant effect on sustainability reporting conduct in the Chinese in- stitutional settings. This paper advances on arguments of the agency and stakeholders theories with these findings. The larger and more independent board facilitates better monitoring of the managers, what leads to decision-making based on a more appre-ciation of stakeholders’ perspectives. The study is premised on the presence/absence of sustainability reporting, and it does not take into consideration the quality aspect, which can result in erroneous interpretation. The results should not be generalized as the sample was based on China’s companies for 2015–2018. This study has policy im-plications for managers and policymakers alike concerning designing board composi- tion conducive to sustainability reporting conduct.


INTRODUCTION
Corporate governance has long been the subject of the meticulous attention of researchers from various domains forming together a big interdisciplinary alliance. The way a company governs affects many areas of the enterprise and in general affects how it fares in a toughly competitive environment (Manning et al., 2019). Corporate social responsibility in general and sustainability reporting, in particular are the areas that are addressed and decided upon by the board of directors (Tibiletti et al., 2021). Thus, the bonds between governance structure and corporate social responsibility are of paramount importance in terms of determining the strategic progression of the firm In the latest years, more and more studies appeared concentrating on various aspects of the composition of boards of directors aiming to ascertain the determinants of efficacy for sound business management (Miglani et al., 2020). The abovementioned studies have focused on board's diversity from various angles be it gender (Kao et al., 2020), race (Field et al., 2020), professional background (Chen et al., 2020), and personal characteristics (Arnaboldi et al., 2020) to name only a few. As the vogue on all sustainability-related came to the forefront the corporate social responsibility as directed by internal governance structure acquired prominent positions in the literature. There is a growing amount of literature devoted to the effect of corporate social responsibility disclosure (CSRD) on the bond between companies and their stakeholders. Notwithstanding the abundance of papers related to the subject matter, only a few papers are focusing on China (Galli & Bassanini, 2020;Kao et al., 2020;Kılıç et al., 2021;Yang et al., 2021). Although they study CSRD they are a way off of the topic as there are discussed linkages between CSR and financial performance (Yang et al., 2021), CSR and "company dimensions, company nationality, the management of the supply chain and operation in China" (Galli & Bassanini, 2020) and whether board's attributes portend the presence of a sustainability committee, and whether the foundation of sustainability committees prompts sustainability reporting conduct (Kılıç et al., 2021) while the linkage of corporate governance attributes and sustainability reporting conduct have awaited its researchers.
Thus, there is a healthy number of prior studies that investigate corporate governance and CSR reporting in various ways, although empirical evidence is so far scarce concerning the effect of sustainability reporting conduct and corporate governance attributes, particularly from China, the jurisdiction with ever-growing influence in the world economy. Moreover, institutional theory advises being cautious while comparing various connections between phenomenon in different institutional settings (countries); it implies that the relationship between sustainability reporting conduct and corporate governance attributes may differ from country to country and, thus, it warrants a study (Djankov et al., 2003). Due to differences in reporting incentives, enforcement regimes, and institutional complementarities, findings from one jurisdiction would be unfit for another (Wysocki, 2011). Therefore, this paper contributes to CSRD literature by examining the linkage between SRC and corporate governance attributes from the underexplored Chinese context. Moreover, this study responds to the latest calls offered by Cuadrado-Ballesteros et al. (2017), Cucari (2019), and Jain and Jamali (2016).
The paper is structured as follows: following introduction, section 1 builds in a theoretical framework for the study and provides the literature review and hypothesis development. This section is followed by section 2 depicting the methods of the paper, while section 3 provides the analysis of the results. Finally, section 4 provides discussions and the paper is concluded with conclusions. Agency theory is utilized often to explicate voluntary sustainability-related disclosure practices (Mio et al., 2020). Agency theory presupposes the conflicts of interest that occur between shareholders (principals) and managers (agents), thus the antagonism between those groups stems from the separation of ownership and control. Agency theory deals with agency problems that arise when both the principal and the agent are trying to maximize their own interests, while those interests differ. Indeed the information asymmetry is the prime factor leading to the agency problem and in the present knowledge-based economy stakeholders seek and appreciate data on sustainability for their decision-making (Mio et  Board size is believed to be one of the most widely studied board characteristics for several reasons (Tibiletti et al., 2021). First, the number of directors can affect the functioning of the board and, consequently, the corporate performance (Biswas et al., 2018). Secondly, the boards of directors are studied also from the perspective of group dynamics and workgroup effectiveness as the decision-making process of those groups is of paramount importance for companies' they oversight. In this regard, size is analyzed in terms of a "pool of expertise" (Tibiletti et al., 2021) and "faultlines strength" potential (Ali & Ayoko, 2020). The large membership on the board leads in the case of a proportional approach to more diverse knowledge and skills sets at the board's disposal without the need for external advice. Moreover, it is believed that large boards may be in the position to alternate the variety of perspectives on corporate strategy and may make the CEO less dominant (Tibiletti et al., 2021). Board size also could facilitate the desire for subgroup interactions (Hart & Van Vugt, 2006). In this regard it is believed that "a small board is likely to have strong faultlines strength because the distinction between the ingroup and outgroup will more likely be sharper and more pronounced" (Ali & Ayoko, 2020, p. 1209).

THEORETICAL FRAMEWORK, LITERATURE REVIEW, AND HYPOTHESIS DEVELOPMENT
There are disadvantages of large boards concerning coordination costs and free-rider problems (Guest, 2009, p. 387). The big board could bring with it some coordination problems related to the time of organizing meetings, it is more problematic to reach consensus as well, and therefore it can lead to less effective decision-making. Moreover, the disproportionally large board might lead to a less cohesive board because "board members will be less likely to share a common purpose, commu-nicate with each other clearly and reach a consensus that builds on the directors' different points of view" (Guest, 2009, p. 387). Finally, the large board is much more likely to have director free-riding problem, as it is more plausible that some direc-tors will play a purely symbolic role (Guest, 2009;Tibiletti et al., 2021).
Board independence is another corporate governance attribute that affects SRC. Independent directors are especially useful in the areas prone to conflict of interest such as financial control, remuneration, and nomination (Giannarakis, 2014;Tibiletti et al., 2021). This inside, outside, and independent directors' distinction is grounded in agency theory and presupposes that independent directors are safeguarding shareholders' interests, particularly minority shareholders' interests (Giannarakis, 2014).
Moreover, independent directors may favor and advocate sustainability reporting following such rationales. First, independent directors are to a smaller extent exposed to influences from managers and shareholders than internal directors, and therefore are prone to be more stakehold- Nevertheless, irrespective of the referred to rationales the independent directors might still be a hinder to SR for example due to not being in fact independent and autonomous in decision-making (Kılıç et al., 2021). In this respect, some authors acknowledge that CSR is correlated with board independence but indicate that this linkage has stuck (Calderón et al., 2020). They believe that it is due to the use of the first generation of the definition of independence (the status-based approach and the contextual approach) and aver that "a consistent definition that identifies the characteristics of independent directors" (Calderón et al., 2020) could be a breakthrough factor as it offers a second-generation interpretation of independence founded on a positive resemblance to the concept.
Female directors are expected to be positively associated with the SRC due to several intertwined reasons. It is believed that "women directors are an important resource linking the firm to its external environment and nomination committees concerned with aligning board composition with the societal and investor expectations" ( Accordingly, the following hypotheses are put forward: H1: There is a positive association between board size and SRC.
H2: There is a positive association between independent directors and SRC.
H3: There is a positive association between female directors and SRC.
H4: There is a negative relationship between CEO duality and SRC.
Therefore, the abovementioned assertions regarding board size (hypothesis 1), board independence (hypothesis 2), CEO duality (hypothesis 4) are founded primarily, but not entirely, on agency theory, whilst the assertion on female directors (hypothesis 3) has been developed predominantly through stakeholder theory application. Nevertheless, it should be stressed that a comprehensive approach is needed as "any theory independently falls short in explaining the relationship completely" (Hussain et al., 2018, p. 415).

METHODS
The paper selects China's A-share main board listed companies from 2015 to 2018 as the research sample. The reason why 2015 was chosen as the initial year of the study was mainly that the Global Reporting Initiative (GRI) released the G4 Chinese version of the Sustainability Reporting Guidelines in Beijing on January 16, 2014. It takes a certain amount of time to establish and improve the internal sustainable development system. Therefore, it is more reasonable to select the reliability and validity of the sustainable-related data after 2014. The sample selection procedure is reported in Table 2.
Financial data comes from the WIND database, corporate governance and other related data come from the China Stock Market & Accounting Research (CSMAR) database, and data processing and statistical software used is Stata16.0.
The regression analysis is used to test the relationship between the corporate governance variables and SRC.

RESULTS
The data set explicated in the preceding section is analyzed by first putting into the spotlight the descriptive results ( Table 4).
The overall level of voluntary disclosure of sustainability reports by Chinese listed companies is not high and varies greatly (mean 0.261, standard deviation 0.439). The average board size is 8.3 (natu- Note: * -When a company has suffered losses for two consecutive years or its net assets are lower than the par value of the stock, "ST" will be added before the stock name, which means "special treatment", and the daily rise and fall shall not exceed 5%. It is used to warn investors to pay attention to investment risks. If In the third year, the company's operations have not improved and it is still in a state of loss, in addition to the "ST" before the stock name, "*" will be added, which means delisting risk. Pearson test also shows that the absolute value of the correlation coefficient between the variables does not exceed 0.5, so this paper excludes the existence of multicollinearity between variables. Table 6 and Table 7 convey the statistical test results of the difference in the sustainability report- ing conduct between state-owned enterprises and private enterprises. The findings show that sustainability reporting conduct of state-owned enterprises is significantly higher than that of private enterprises and this result is significant at the 1% level. Based on the setting of model (1), the multiple regression model is used to examine the specific impact of the board size on the SRC of the company to verify whether hypothesis 1 is valid ( Table 8).
The results hold for both state (0.139, p < 0.01) and private companies (0.068, p < 0.05), signaling that board size plays an obvious role in promoting proactive SRC.
The regression coefficient on independent directors and SRC is 0.341 (Table 8) and it has passed the statistical significance test under the 1% confidence level, indicating that independent directors lead to the enhancement of the company's sustainable reporting conduct. Thus, hypothesis 2 has been confirmed. It shows that the higher the proportion of independent directors, the better the corporate sustainability information disclosure. The paper's findings imply that board independence is not that very significant for state-owned companies (0.238, not passed the statistical signif-icance test), whereas conducive for a boost in SRC for privately owned firms (0.276, p < 0.01).
The findings testify that female directors on board although have a positive influence (0.005) but as it has not passed the statistical significance test hypothesis 3 has been rejected meaning that female directors have an insignificant impact on SRC. Moreover, in state-owned companies, the proportion of women on the board of directors has even an insignificant negative impact (-0.028, not passed the statistical significance test) on sustainability reporting conduct, whilst in private-owned -an insignificant positive (0.026, not passed the statistical significance test).
The regression results of CEO duality on SRC (Table 8, based on the regression model (1) is insignificantly positive (0.005), but it has not passed the statistical significance test. Thus, hypothesis 4 is rejected. However, as well as in the case of fe- male directors, CEO duality pushes state and private companies into contrasting directions. CEO duality in state-owned companies has a negative regression coefficient (-0.025) to SRC, which does not pass the statistical significance test, whereas in private companies -positive (0.012) but also statistically insignificant.
Among the control variables, worth noting two indicators the size of the company (SIZE) and the age of the company (AGE) which both significantly positively correlated at the level of 1%, indicating that large-scale and older companies have a higher level of sustainability reporting conduct. The STATE coefficient is positive (0.117, p < 0.01) indicating that the level of SRC of state-owned enterprises is higher than that of non-state-owned enterprises. The debt-to-asset ratio (LEV) is significantly negatively correlated at the 1% level (-0.160), indicating that companies with a low debt-to-asset ratio perform better in the disclosure of sustainability information.
Interestingly enough among state-owned companies (1), the size of the company (SIZE) and the age of the company (AGE) are significantly positively correlated at the levels of 1% and 5% respectively, while return on assets (ROA) and financial leverage (LEV) are significantly negatively correlated at 5% and 1% respectively. It shows that state-owned companies with large scale, solid age, low return on assets, and low asset-liability ratio have a higher level of sustainability information disclosure. Among private companies (2), return on assets (ROA), enterprise size (SIZE), and company age (AGE) are all significantly positively correlated at the 1% level, and (TOP1) are significantly negatively correlated at the 1% level. It shows that private enterprises with a high return on assets, large scale, solid age, and low ownership concentration have a higher level of SRC.
To test the robustness of the estimated relationship between corporate governance attributes and sustainability reporting conduct, another set of regressions was performed using the variable substitution method (Table 8). For this, the core variables of this paper were replaced. Such as the number of directors serving on the board was replaced by the original natural logarithm of the number of directors serving on the board by the number of directors serving on the board to verify the research hypotheses 1-4 proposed in this paper. Through the variable substitution method, it was found that the conclusions are still intact and valid.

DISCUSSIONS
This paper aims to explore the association between sustainability reporting conduct and corporate governance attributes in Chinese intuitional settings. The study posits that sustainability reporting conduct is decided by corporate governance structure and in a particular board of directors as its bone and therefore the composition of the board reflects in a firm's position toward sustainability-related reporting. This study contributes to the literature in several ways. First, regarding the literature on board structure and SRC, the findings show that board composition affects sustainability reporting conduct. Thus, the results provide support for the theoretical assertions of agency and stakeholder theories concerning this relationship. Furthermore, the evidence extends the knowledge and support specialists on how to enhance sustainability reporting through a balanced composition of the corporate governance structure. Thus, a strong corporate governance mechanism can be a powerful instrument to lessen agency problems and inspire managers to steer the company appropriately for stakeholders' interests to be properly considered.
The study has several limitations. The main research limitations are related to its design as the sample is limited to only companies listed in 2015-2018. This design is justified by the general logic of the study. However, the next rating for 2020 will allow extending the study time by two years. Moreover, the study is premised on the presence/absence of sustainability reporting, and it does not take into consideration the quality aspect, which can result in erroneous interpretation. The results should not be generalized as the sample was based on China's companies for 2015-2018. It is advisable for future research to mitigate those limitations through the expansion of the sample selection range and the selection period. Next, in terms of research content, there is still a big gap between the CSRD of Chinese private companies and state-owned companies. Therefore, in the follow-up research, scrutiny should be placed to the differences between the CSRD of private companies and large state-owned companies, and the improvement of the evaluation system, to enrich the research on CSDR of private companies.

CONCLUSIONS
This paper investigates the association between sustainability reporting conduct and corporate governance attributes in Chinese intuitional settings.
It was found that board size and board independence are positively associated with SRC, whereas female directors and CEO duality have a positive although statistically insignificant impact.
Thus, in the Chinese institutional setting, board size and board independence are positively associated with SRC, whereas CEO duality is negatively associated with SRC. The fact that some attributes of corporate governance have a positive effect on SRC and some have a negative effect indicates that firms need to take this into account and build their boards of directors accordingly. In the Chinese institutional setting, in particular, the composition of boards designated by a large size and the predominance of independent directors is conducive for SRC. In contrast, having more female directors on boards does not have an impact on SRC. Thus, managers who engage with SRC should aim to a certain board structure because not all board characteristics affect positively SRC as evident by the study. In the same vein, policymakers are also to consider and propose and endorse large and independent boards.