King Codes on Corporate Governance and ESG Performance: Evidence from FTSE/JSE All-Share Index

  • Federica DoniEmail author
  • Antonio Corvino
  • Silvio Bianchi Martini
Part of the CSR, Sustainability, Ethics & Governance book series (CSEG)


The purpose of this chapter is to assess the main content of the South African Corporate Governance Code, King III, and to explore the relationship between environmental/social performance and corporate governance practices in a sample of South African listed companies following its adoption. The main objective of King III, and the more recent King IV, is to promote good corporate governance as a driver for ethical and effective leadership at board level. In supporting companies, these codes provide recommendations for a culture of sustainability and environmental performance, adequate control by the governing body and for promoting trust in the organization’s reputation and legitimacy. These principles of “good governance” can be evaluated through the process of Integrated Reporting, which became a mandatory listing requirement for South African listed companies from 2010 onwards. This requirement is consistent with the approach suggested by the Global Governance Principles, which include the recommendation that boards should produce integrated reports. In this context, our empirical analysis is focused on the Integrated Reports drawn up by a sample of companies listed on the Johannesburg Stock Exchange (JSE), in order to evaluate whether the recent adoption of corporate governance codes enhances environmental and social performance and improves corporate governance. Our period of analysis runs from 2012, 2 years after the introduction of King III in 2010, to 2016, immediately after the publication of the draft version of King IV, and we investigate whether the release of corporate governance codes can influence environmental and social performance and improve corporate governance practices. In this regard, we found that King III does exert an influence on Environmental, Social and Governance (ESG) performance. Moreover, the presence of an active board, able to allocate tasks and responsibilities among different committees, along with the creation of an all-encompassing vision aimed at integrating financial and non-financial perspectives—an integrated thinking approach—are positively associated with environmental and social performance. Therefore, this empirical study can contribute to our understanding of how mandatory adoption of King III and Integrated Reporting affect ESG factors and board attitude to sustainability issues. Finally, we discuss a number of managerial implications, offering suggestions for managers, directors, consultants, investors and policymakers.



Although the chapter is the result of a conjoint analysis, Sects. 17.1 and 17.2 have been written by Silvio Bianchi Martini, Sects. 17.3 and 17.4 by Federica Doni and Sects. 17.5 and 17.6 by Antonio Corvino.


  1. Adams, C. A. (2015). The international integrated reporting council: A call to action. Critical Perspectives on Accounting, 27, 23–28.CrossRefGoogle Scholar
  2. Adams, C. A. (2017). Conceptualising the contemporary corporate value creation process. Accounting, Auditing & Accountability Journal, 30(4), 906–931.CrossRefGoogle Scholar
  3. Agyei-Mensah, B. K. (2017). The relationship between corporate governance, corruption and forward-looking information disclosure: A comparative study. Corporate Governance: The International Journal of Business in Society, 17(2), 284–304.CrossRefGoogle Scholar
  4. Amran, A., Lee, S. P., & Devi, S. S. (2014). The influence of governance structure and strategic corporate social responsibility toward sustainability reporting quality. Business Strategy and the Environment, 23(4), 217–235.CrossRefGoogle Scholar
  5. Atkins, J. F., & Maroun, W. (2015). Integrated reporting in South Africa in 2012: Perspectives from South African institutional investors. Meditari Accountancy Research, 23(2), 197–221.CrossRefGoogle Scholar
  6. Audit Committees, Combined Code Guidance. (2003, January). A report and proposed guidance by an FRC- appointed group chaired by Sir Robert Smith. The financial reporting council limited. Accessed January 30, 2018, from
  7. Baek, H. Y., Johnson, D. R., & Kim, J. W. (2009). Managerial ownership, corporate governance, and voluntary disclosure. Journal of Business and Economic Studies, 15(2), 44–71.Google Scholar
  8. Beekes, W., Brown, P., Zhan, W., & Zhang, Q. (2016). Corporate governance, companies’ disclosure practices and market transparency: A cross country study. Journal of Business Finance & Accounting, 43(3–4), 263–297.CrossRefGoogle Scholar
  9. Bianchi Martini, S., Corvino, A., & Doni, F., (2017). Integrated Reporting, corporate governance practices, social sustainability policies and environmental disclosure. The case of South Africa, European Academy of Management. EURAM 2017 making knowledge work. University of Strathclyde Business School, 21st–24th of June 2017, 1–27.Google Scholar
  10. Bondy, K., Matten, D., & Moon, J. (2008). Multinational corporation codes of conduct: Governance tools for corporate social responsibility? Corporate Governance an International Review, 16(4), 294–311.CrossRefGoogle Scholar
  11. Bryman, A., & Cramer, D. (2001). Quantitative data analysis with SPSS release 10 for Windows: A guide for social scientists. Hove: Routledge.Google Scholar
  12. Buckholtz, A. K., Brown, J. A., & Shabana, K. M. (2008). Corporate governance and corporate social responsibility. In A. Crane, A. McWilliams, D. Matten, J. Moon, & D. S. Siegel (Eds.), The Oxford handbook of CSR (pp. 327–345). Oxford: Oxford University Press.Google Scholar
  13. Cadbury Report. (1992, December). Report of the committee on the financial aspects of corporate governance. London: Brugens Science Press. Accessed January 30, 2018, from
  14. Carels, C., Maroun, W., & Padia, N. (2013). Integrated reporting in the South African mining sector. Corporate Ownership & Control, 11(1), 947–961.CrossRefGoogle Scholar
  15. Cerbioni, F., & Parbonetti, A. (2007). Exploring the effects of corporate governance on intellectual capital disclosure: An analysis of European biotechnology companies. European Management Review, 16(4), 791–826.Google Scholar
  16. Chan, M. C., Watson, J., & Woodliff, D. (2014). Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), 59–73.CrossRefGoogle Scholar
  17. Cheng, M., Green, W., Conradie, P., Konishi, N., & Romi, A. (2014). The international integrated reporting framework: Key issues and future research opportunities. Journal of International Financial and Management Accounting, 25, 90–119.CrossRefGoogle Scholar
  18. Churet, C., & Eccles, R. G. (2014). Integrated reporting, quality of management, and financial performance. Journal of Applied Corporate Finance, 26(1), 56–64.Google Scholar
  19. Clarkson, M. B. E. (1995). A stakeholder framework for analyzing and evaluating corporate social performance. Academy of Management Review, 20(1), 92–117.CrossRefGoogle Scholar
  20. Cowen, S. S., Ferreri, L. B., & Parker, L. D. (1987). The impact of corporate characteristics on social responsibility disclosure: A typology and frequency-based analysis. Accounting, Organizations and Society, 12(2), 111–122.CrossRefGoogle Scholar
  21. De Villiers, C., Venter, E. R., & Hsiao, P. K. (2016). Integrated reporting: Background, measurement issues, approaches and an agenda for future research. Accounting and Finance, 57, 937–959.CrossRefGoogle Scholar
  22. Diale, A. J. (2012). The relevance or irrelevance of corporate social responsibility (CSR) to enhance government-business relations in South Africa: A theoretical exposition. Global Conference on Business and Finance Proceedings, 7(1), 759–764.Google Scholar
  23. Doni, F., & Fortuna, F. (2018). Corporate governance code in South Africa after the adoption of integrated reporting, evidence from the mining industry. International Business Management, 12(1), 68–81.Google Scholar
  24. Doni, F., Gasperini, A., & Pavone, P. (2016). Early adopters of integrated reporting: The case of the mining industry in South Africa. African Journal of Business Management, 10(9), 187–208.CrossRefGoogle Scholar
  25. Dumay, J., & Dai, T. (2017). Integrated thinking as a cultural control? Meditari Accountancy Research, 25(4), 574–604.CrossRefGoogle Scholar
  26. Dumay, J., & Xi Dai, T. M. (2014). Integrated thinking as an organisational cultural control?. In Critical perspectives on accounting conference, 7th-9th July, Toronto, Canada.Google Scholar
  27. Dumay, J., Bernardi, C., Guthrie, J., & Demartini, P. (2016). Integrated reporting: A structured literature review. Accounting Forum, 40(3), 166–185.CrossRefGoogle Scholar
  28. Eccles, R. G., & Krzus, M. P. (2010). One report: Integrated reporting for a sustainable strategy. New York: Wiley.Google Scholar
  29. Eccles, R. G., & Youmans, T. (2016). Materiality in corporate governance: The statement of significant audiences and materiality. Journal of Applied Corporate Finance, 28, 39–46.Google Scholar
  30. Eccles, R. G., Krzus, M. P., & Ribot, S. (2015a). The integrated reporting movement, meaning, momentum, motives and materiality. New York: Wiley.Google Scholar
  31. Eccles, R. G., Krzus, M. P., & Ribot, S. (2015b). Models of best practices in integrated reporting, 2015. Journal of Applied Corporate Finance, 27(2), 103–115.CrossRefGoogle Scholar
  32. Feng, T., Cummings, L., & Tweedie, D. (2017). Exploring integrated thinking in integrated reporting: An exploratory study in Australia. Journal of Intellectual Capital, 18(2), 330–353.CrossRefGoogle Scholar
  33. FRC, Financial Reporting Council. (2011, December). Developments in corporate governance 2011: The impact and implementation of the UK corporate governance and stewardship codes. Accessed January 30, 2018, from
  34. FRC, Financial Reporting Council. (2012, September). UK stewardship code. Accessed January 30, 2018, from
  35. FRC, Financial Reporting Council. (2014, September). The UK corporate governance code. Accessed January 30, 2018, from
  36. FRC, Financial Reporting Council. (2016, April). The UK corporate governance code. Accessed January 30, 2018, from
  37. FRC, Financial Reporting Council. (2017, April). Annual review of corporate reporting 2016–2017. Accessed January 30, 2018, from
  38. Frias-Aceituno, J. V., Rodriguez-Ariza, L., & Garcia-Sanchez, I. M. (2013). The role of the board in the dissemination of integrated corporate social reporting. Corporate Social Responsibility Environmental Management, 20, 219–233.CrossRefGoogle Scholar
  39. Frias-Aceituno, J. V., Rodriguez-Ariza, L., & Garcia Sanchez, I. M. (2014). Explanatory factors of integrated sustainability and financial reporting. Business Strategy and the Environment, 23, 56–72.CrossRefGoogle Scholar
  40. Garcia-Lara, J. M., Garcia-Osma, B., & Penalva, F. (2009). Accounting conservatism and corporate governance. Review of Accounting Studies, 14(1), 161–201.CrossRefGoogle Scholar
  41. Greenbury Recommendations. (1995). Accessed January 30, 2018, from
  42. Haji, A. A., & Hossain, D. M. (2016). Exploring the implications of integral reporting on organisational reporting practice: Evidence from highly regarded integrated reporters. Qualitative Research in Accounting & Management, 13(4), 415–423.CrossRefGoogle Scholar
  43. Hampel Committee. (1998). Final report. Accessed January 30, 2018, from
  44. Haniffa, A. J., & Hudaib, M. (2006). The impact of culture and governance on corporate social reporting. Journal of Accounting and Public Policy, 24(5), 391–430.CrossRefGoogle Scholar
  45. Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1–3), 405–440.CrossRefGoogle Scholar
  46. Helfaya, A., & Moussa, T. (2017). Do board’s corporate social responsibility strategy and orientation influence environmental sustainability disclosure? UK evidence. Business Strategy and the Environment, 26(8), 1061–1077.CrossRefGoogle Scholar
  47. Hidalgo, R. L., Garcìa-Meca, E., & Martìnez, I. (2011). Corporate governance and intellectual capital disclosure. Journal of Business Ethics, 100(3), 483–495.CrossRefGoogle Scholar
  48. Hindley, T., & Buys, P. W. (2012). Integrated reporting compliance with the global reporting initiative framework: An analysis of the South African mining industry. International Business & Economics Research Journal, 11(11), 1249–1260.Google Scholar
  49. Hooghiemstra, R. (2000). Corporate communication and impression management – New perspectives why companies engage in corporate social reporting. Journal of Business Ethics, 27(1–2), 55–68.CrossRefGoogle Scholar
  50. ICGN, International Corporate Governance Network. (2013). Guidance on institutional investors responsibilities. Accessed January 30, 2018, from
  51. IODSA, Institute of Directors in Southern Africa. (2016). King IV report on corporate governance for South Africa. Accessed January 30, 2018 from
  52. IFA, Institute Français des Administrateurs. (2017). The board of directors and integrated reporting. IFA publications. Accessed January 30, 2018, from
  53. IFAC, International Federation of Accountants. (2012, October). Integrated governance for sustainable success. Accessed January 30, 2018, from
  54. IIRC & IFAC, International Integrated Reporting Council. (2017). Creating value: CFO Leadership in <IR>. Accessed January 30, 2018, from
  55. IIRC, International Integrated Reporting Council. (2013, December). The international <IR> framework. Accessed January 30, 2018, from
  56. IIRC, International Integrated Reporting Council. (2014). Creating value: Value to the board. Accessed January 30, 2018, from
  57. IIRC, International Integrated Reporting Council. (2016, October). Creating value: The cyclical power of integrated thinking and reporting. Accessed January 30, 2018, from
  58. Investment Responsible Research Center Institute (IRRCI) – Sustainable Investment Institute (SII). (2013). Integrated financial and sustainability reporting in the United States. Accessed January 30, 2018, from
  59. IODSA, Institute of Directors in Southern Africa. (2009). King code of governance for South Africa. Accessed January 30, 2018, from
  60. IODSA, Institute of Directors in Southern Africa. (2013, March). Perception and practice of King III in South African companies. Accessed January 30, 2018, from
  61. Johannesburg Stock Exchange (JSE). (2004). Socially Responsible Investment (SRI) index. Accessed January 30, 2018, from
  62. Kaymak, T., & Bektas, E. (2017). Corporate social responsibility and governance: Information disclosure in multinational corporations. Corporate Social Responsibility and Environmental Management, 24(6), 555–569.CrossRefGoogle Scholar
  63. Knauer, A., & Serafeim, G. (2014). Attracting long-term investors through integrated thinking and reporting: A clinical study of a biopharmaceutical company. Journal of Applied Corporate Finance, 26(2), 57–64.CrossRefGoogle Scholar
  64. Kojima, K. (1998). Corporate governance: An international comparison. Kobe University Research Institute for Economics and Business Administration.Google Scholar
  65. KPMG. (2017). The road ahead. The KPMG survey of corporate responsibility reporting 2017. Accessed January 30, 2018, from
  66. Liu, X., & Zhang, C. (2017). Corporate governance, social responsibility information disclosure, and enterprise value in China. Journal of Cleaner Production, 142, 1075–1084.CrossRefGoogle Scholar
  67. Lyon, T. P., & Maxwell, J. W. (2011). Greenwash: Corporate environmental disclosure under threat of audit. Journal of Economics & Management Strategy, 20, 3–41.CrossRefGoogle Scholar
  68. Mallin, C., & Michelon, G. (2011). Board reputation attributes and corporate social performance: An empirical investigation of the US best corporate citizens. Accounting and Business Research, 41(2), 119–144.CrossRefGoogle Scholar
  69. Mallin, C., Michelon, G., & Raggi, D. (2013). Monitoring intensity and stakeholders’ orientation: How does governance affect social and environmental disclosure? Journal of Business Ethics, 114(1), 29–43.CrossRefGoogle Scholar
  70. McNally, M. A., Cerbone, D., & Maroun, W. (2017). Exploring the challenges of preparing an integrated report. Meditari Accountancy Research, 25(4), 481–504.CrossRefGoogle Scholar
  71. Melloni, G. (2015). Intellectual capital disclosure in integrated reporting: An impression management analysis. Journal of Intellectual Capital, 16(3), 661–680.CrossRefGoogle Scholar
  72. Merkl-Davies, D. M., & Brennan, N. M. (2007). Discretionary disclosure strategies in corporate narratives: Incremental information or impression management? Journal of Accounting Literature, 27, 116–196.Google Scholar
  73. Michelon, G., & Parbonetti, A. (2010). Stakeholder engagement: Corporate governance and sustainability disclosure. Journal of Management and Governance, 16(3), 477–509.CrossRefGoogle Scholar
  74. Nagata, K., & Nguyen, P. (2017). Ownership structure and disclosure quality: Evidence from management forecasts revisions in Japan. Journal of Accounting and Public Policy, 36(6), 451–467.CrossRefGoogle Scholar
  75. Nazari, J. A., Herremans, I. M., & Warsame, H. A. (2015). Sustainability reporting: External motivators and internal facilitators. Corporate Governance: The international journal of business in society, 15(3), 375–390.CrossRefGoogle Scholar
  76. Nestor, S., & Thompson, J. K. (1999). Corporate governance patterns in OECD economies: Is convergence under way? Paris: OECD Publications.Google Scholar
  77. Ntim, C. G., Opong, K. K., & Danbolt, J. (2012). The relative value relevance of shareholder versus stakeholder corporate governance disclosure policy reforms in South Africa. Corporate Governance: An International Review, 20, 84–105.CrossRefGoogle Scholar
  78. OECD. (2015). G20/OECD principles of corporate governance. Paris: OECD Publishing. Accessed January 30, 2018, from
  79. Oliver, J., Vesty, G., & Brooks, A. (2016). Conceptualising integrated thinking in practice. Managerial Auditing Journal, 31(2), 228–248.CrossRefGoogle Scholar
  80. Peters, G. F., & Romi, A. M. (2014). Does the voluntary adoption of corporate governance mechanisms improve environmental risk disclosures? Evidence from greenhouse gas emission accounting. Journal of Business Ethics, 125(4), 637–666.CrossRefGoogle Scholar
  81. Raemaekers, K., Maroun, W., & Padia, N. (2016). Risk disclosures by South African listed companies post-King III, South African listed companies post-King III. South African Journal of Accounting Research, 30(1), 1–20.CrossRefGoogle Scholar
  82. Rensburg, R., & Botha, E. (2014). Is integrated reporting the silver bullet of financial communication? A stakeholder perspective from South Africa. Public Relations Review, 40(2), 144–152.CrossRefGoogle Scholar
  83. Rodriguez-Fernandez, M. (2016). Social responsibility and financial performance: The role of good corporate governance. Business Research Quarterly, 19(2), 137–151.CrossRefGoogle Scholar
  84. SAICA. (2015). Integrated thinking: An exploratory survey. Accessed January 30, 2018, from
  85. Setia, N., Abhayawansa, S., Joshi, M., & Huynh, A. V. (2015). Integrated reporting in South Africa: Some initial evidence. Sustainability Accounting, Management and Policy Journal, 6(3), 397–424.CrossRefGoogle Scholar
  86. Thomson Reuters. (2017). ASSET4 ESG research data. Accessed January 30, 2018 from
  87. West, A. (2009). Corporate governance convergence and moral relativism. Corporate Governance: An International Review, 17(1), 107–119.CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Federica Doni
    • 1
    Email author
  • Antonio Corvino
    • 2
  • Silvio Bianchi Martini
    • 3
  1. 1.Department of Business and LawUniversity of Milano-BicoccaMilanItaly
  2. 2.Department of EconomicsUniversity of FoggiaFoggiaItaly
  3. 3.Department of Economics and ManagementUniversity of PisaPisaItaly

Personalised recommendations