ESG disclosure, board diversity and ownership: Did the revolution make a difference in Egypt?

Egypt witnessed radical and unexpected changes in the political, social and cultural environment that came as a result of the Arab Spring. Since the revolution caused a paradigm shift in so many socio-economic aspects, it is plausible that it also caused dramatic changes in the relationships of board, ownership, and environmental, social, and governance (ESG) practices in different ways. Accordingly, understanding the corporate governance of the largest Arab state in the MENA region following the Arab Spring is a huge benefit. Using the 2011 Egyptian revolution as the exogenous shock, this study empirically examines the effects of board diversity and ownership structure on the ESG disclosure index in the Egyptian Stock Exchange (EGX) listed firms for the pre-revolution (2007–2011) and post-revolution (2012–2014) periods. Using 160 observations for the pre-revolution and 99 observations for the post-revolution periods, we document a significant positive effect of board national diversity on the ESG index in the pre-revolution period. This effect disappears in the post-revolution period. In contrast, we find that board gender diversity shows no significant effect in determining the ESG index in both pre- and post-revolution periods. We additionally find that ownership variables have a positive impact on ESG disclosure in the pre-revolution period. However, this impact is not carried forward to the post-revolution period. Further analysis on moderating effects suggests that the presence of female board members and state ownership can diminish the effective role of foreign board members towards ESG disclosure. These findings can provide policymakers, regulators, investors, and other stakeholders with a broader perspective of corporate board diversity and ownership when aiming to ensure an optimal level of ESG disclosure from listed companies in Egypt or other emerging markets.