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In response to EU Directive 95/2014, many companies headquartered in Europe have strengthened their non‐financial disclosure on environmental strategies and risks. In particular, the Directive was applied by Italian law, with the Legislative Decree 254/2016, requiring the largest Italian companies (exceeding 500 employees) to provide detailed information on their social and environmental disclosures. In this paper, we aim to analyze the value relevance of financial and environmental information provided by the Italian, non‐financial listed companies after the implementation of the Legislative Decree 254/2016. By building on the signaling theory, we set a pooled regression analysis to test the relationship between environmental disclosure and value relevance for the period 2017–2018. We contribute to the literature by arguing that Italian companies' market value depends on both their financial and environmental disclosures. More specifically, we argue that accounting information is not sufficiently capable to explain the value relevance and it needs to be integrated by a set of environmental information. Our contribution aims at demonstrating that the higher the levels of environmental risk indicators disclosure, the greater a company's market performance. [ABSTRACT FROM AUTHOR]

More and more, the finance and the financial sector are used as a means of achieving social goals. Thus, the main financial market participants are required to change their ESG identity and to act no longer only as a seller of sustainable products, but also as sustainable actors themselves. For this purpose, banks and financial institutions are required to complement financial information with environmental, social, and governance (ESG) statements to provide a wider overview of the value creation process. Despite the banking sector being of utmost importance in the promotion of a transition towards sustainable economic development, the analysis of the attributes of their non-financial disclosure (NFD) has achieved little attention from scholars thus far. This paper aims at investigating the relationships between board composition and some textual attributes of NFDs by testing the incremental information vs. impression management approach in the Italian banking sector for the years 2017–2020, after the introduction of Directive (2014)/95/EU. The final sample is composed of 29 Italian banks. A two-step analysis was conducted. In the first stage, a content analysis was performed to assess the textual attributes of the disclosures, and in the second a multivariate regression model with panel data was run. Empirical findings found a significant impact of board composition and textual attributes on conciseness, completeness, positive tone, and the reading difficulty of NFDs. Results from this study contribute to the literature on disclosure strategies and theories by providing additional knowledge on the role of certain characteristics of corporate governance in explaining some textual attributes of NFDs in the financial sector. Managerial implications are related to the (re-)design of some governance features which are more suitable in providing a more transparent and comparable NFD. Policy implications are related to the development of policies and regulations at the international level that combine high-quality sustainability-related information and the governance features of financial institutions. • Board composition impacts textual attributes of the non-financial disclosures (NFDs) of banks. • The participation of women in the board of Italian banks mirrors less complete, readable, and balanced NFDs. • The increase over time of women on the board enhances bank NFD completeness. • Smaller boards of directors are associated with higher completeness of bank NFDs. [ABSTRACT FROM AUTHOR]