Beyond linearity: a dual-perspective analysis of green corporate boards and climate change target disclosure

Purpose This study aims to examine the effect of having environmentally qualified board members on the disclosure of corporate climate targets disclosure (CTD). This study specifically examines the nature of the relationship between green corporate boards (GCBs) and CTD, tests whether this effect is linear or nonlinear and thereby addresses a potentially underexplored area of research. Design/methodology/approach This study uses a novel index to quantify GCBs based on the board members’ environmental education and work experiences. The sample comprises Chinese A-share listed firms from 2013 to 2022. Findings Using rigorous empirical techniques, the study finds a positive and significant association between GCBs and CTD. More importantly, the results indicate a nonlinear (inverted U-shaped) effect of GCBs on CTD, implying that the marginal benefit of green representation declines beyond a certain level and pointing to signaling saturation. Furthermore, the cross-sectional results suggest that the nonlinear effects of GCBs on CTD are pronounced in non-state-owned firms, those with low institutional ownership, those that belong to environmentally sensitive sectors and those with low environmental performance. Originality/value The findings present important insights regarding the enhancement of board structures and suggest that governance reforms can facilitate climate-related transparency.