Published Online:July 2025
Product Name:The IUP Journal of Corporate Governance
Product Type:Article
Product Code:IJCG010725
DOI:10.71329/IUPJCG/2025.24.3.5-23
Author Name:Rajesh Pathak and Abhishek Ranga
Availability:YES
Subject/Domain:Management
Download Format:PDF
Pages:5-23
The paper examines whether religious social norms impact the environmental, social and governance (ESG) disclosure practices of firms. Additionally, the study investigates how different characteristics of firm’s board and country’s formal institutions moderate the religiosity and corporate social sustainability relationship. Employing a sample of 1,856 unique firms across 12 countries and using country weighted Tobit regression analysis, the study shows a nonlinear (U-shaped) relationship between religiosity and ESG disclosure, which signifies that firms in countries with high and low level of religiosity make more ESG disclosures as compared to firms in countries with moderate level of religiosity. Further, the study observes that board gender diversity and board independence strengthen the religiosity-ESG relationship. However, an inverted U- shaped relationship is observed for interaction with board size, suggesting that firms in high religiosity environment disclose lesser on ESG, as firms with a large board take community trust for granted. Furthermore, the study reports the strong moderating role of regulatory quality, control of corruption and rule of law, albeit the relationship becomes inverted U-shaped for other dimensions of formal institutions. The study contributes to the discussion on firm’s ESG disclosures and provides insights on the role of board characteristics and country’s formal institutions in managing the religiositycorporate social sustainability linkages.
The relationship between religiosity and government regulation may impact business practices. Existing studies suggest that firms operating in a particular community are affected by countryspecific regulations and the behavioral, cultural, and social characteristics of individuals in the community (Campbell, 2007).