What question did this study set out to answer?

This study aims to examine how specific corporate governance attributes influence ESG disclosure practices in non-financial firms in Saudi Arabia.

July 31, 2026Open Access

Corporate governance drivers of ESG disclosure in Saudi non-financial listed firms

NGNassreddine GarouiQassim University

Key Points

This study aims to examine how specific corporate governance attributes influence ESG disclosure practices in non-financial firms in Saudi Arabia.
Utilized an unbalanced panel dataset of 171 firm-year observations from 100 non-financial firms listed on the Saudi Exchange.
Employed fixed-effects panel regression, two-stage least squares (2SLS), and System-GMM for analysis.
Operationalized ESG disclosure through a GRI-aligned binary index and natural logarithm of ESG-related word counts.
Board gender diversity, CEO power, and the presence of a sustainability committee significantly increase ESG disclosure quality.
Board size and financial leverage negatively affect ESG reporting.
No significant direct impacts of board independence, ownership structure, or financial profitability (ROA) on ESG disclosure.

Abstract

Abstract Corporate governance (CG) serves as a critical internal determinant of environmental, social, and governance (ESG) disclosure transparency, yet empirical evidence from emerging Gulf Cooperation Council (GCC) markets remains underdeveloped. This study investigates the impact of key corporate governance attributes on ESG disclosure practices within the Saudi Arabian non-financial firms. Utilizing an unbalanced panel dataset of 171 firm-year observations from 100 non-financial firms listed on the Saudi Exchange (Tadawul) over the period 2020–2024, the study employs content analysis to operationalize ESG disclosure through two complementary measures: a GRI-aligned binary index (ESGD1) and the natural logarithm of ESG-related word counts (ESGD). To address potential endogeneity, unobserved heterogeneity, and dynamic persistence, the empirical baseline established via fixed-effects panel regression with cluster-robust standard errors is rigorously supplemented by two-stage least squares (2SLS) estimation and a dynamic System Generalized Method of Moments (System-GMM) framework. The empirical findings reveal that board gender diversity, CEO power, executive compensation, the presence of a dedicated sustainability committee, and overall firm size exert a positive and highly significant influence on both the volume and quality of ESG disclosures. Conversely, board size and financial leverage exhibit a significant negative relationship with ESG reporting, while board independence, ownership structure, and financial profitability (ROA) demonstrate no statistically significant direct impact. These insights suggest that rather than general board oversight, targeted governance structures specifically specialized sustainability committees, enhanced executive gender diversity, and strategic executive incentive alignment are the primary internal criteria driving corporate sustainability transparency. The results offer critical policy and managerial implications for the optimization of governance frameworks under the transformation mandates of Saudi Vision 2030 and evolving Tadawul disclosure guidelines.

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