Disclosures of diversity: a study of whether Swedish firms talk their walk

Abstract: Societal demands for sustainability in combination with laws and regulations on how to report on sustainability have enforced firms to both act on stakeholders' demands and to report in accordance with laws and regulations. Diversity has become an essential part of sustainability, and diversity in the context of the board room is of particular interest. Despite numerous efforts to diversify boards of directors, progress is slow and therefore, EU passed a directive on disclosures of diversity that Sweden implemented through an amendment to the Swedish Annual Accounts Act effective from January 1st, 2017. This is a unique opportunity to study how legislative changes affect disclosure practise. Thus, this thesis examines Swedish firms listed on a regulated stock exchange in Sweden and level of quality of their disclosures of diversity policy using data on 2016 and 2017. The level of quality is assessed through a content analysis and an indexing procedure developed by the authors of this thesis. The purpose of this thesis is to examine quality of disclosures of diversity policy in accordance with the amendment to the Swedish Annual Accounts Act. The outcome of the amendment is investigated as well as the association between board of directors' characteristics and disclosures of diversity policy. On average, there is a statistically significant increased level of disclosures from 2016 to 2017 among firms included in the sample. That is, without considering other events, the legal requirement to disclose on a diversity policy seems to affect how firms disclose. However, results do not indicate any significant association between board of directors' characteristics and disclosures of diversity policy, hence homogeneous boards of directors' seem to be as good as diverse boards of directors' at emphasising disclosures of diversity policy.