The stakeholder engagement in the European banks: Regulation versus governance. What changes after the {NF} directive?

Previous studies show regulation and corporate governance play an important role in affecting CSR processes and outcomes. The stakeholder engagement (SE) process represents a good practice of Corporate Social Responsibility (CSR) and, at the same time, an aspect of substance over form, within the CSR policies. In spite of its relevance, SE represents a little explored field of research. The purpose of this paper is to investigate if the improvements in SE processes are actually driven by regulation rather than by some elements of corporate governance. The study examines the effect of the regulation and some board's characteristics on SE. Specifically, in 2017 the introduction of EU non-financial information Directive (Directive 2014/95/EU) shifts the disclosure of non-financial information from the voluntary to the mandatory realm: in this mandatory context, the quality of the SE process that is indirectly disclosed in non-financial information, could improve. By using a content and statistical analysis, through performing 4 two-way Analysis of Variance, the study reveals that the effects of the introduction of the Directive 2014/95/EU on the stakeholder engagement process have been limited and the improvements in SE before and after the introduction of the Directive link to the Board of Directors characteristics. These findings are interesting for academics, by enriching the academic debate on mandatory versus voluntary disclosure and the relationship between board attributes and sustainability, for policy makers, by providing suggestions to favour organisational change of the firms, and for managers, by identifying the desirable characteristics of the Board of Directors.