Examining the effect of hedge fund activism on gender diversity, we find that the number of female directors decreases after a firm is targeted by hedge fund activism. Using the employment history data from BoardEx, we find that activist hedge funds are more likely to appoint people with finance backgrounds to the boards of target firms. And the newly appointed finance background directors are almost all male because of the lack of diversity in the finance industry. The lack of gender (...) diversity of the hedge funds’ networks and the lack of qualified female directors in the local area also help explain the impact of hedge fund activism on gender diversity on the board. (shrink)

This study via the sensemaking perspective examines whether spiritual leadership can influence employee workplace spirituality and employee corporate social responsibility (CSR) participation. We also examine the joint effects of spiritual leadership and employee Machiavellianism on employee workplace spirituality. Using a sample of 556 employees from four commercial banks in China, analyses demonstrate that employee workplace spirituality mediates the relationship between spiritual leadership and employee CSR participation and that the indirect effect of spiritual leadership on employee CSR participation is dependent on (...) the level of employee Machiavellianism. These results shed light on how and why spiritual leadership and employee Machiavellianism influence employee workplace spirituality and employee CSR participation. The theoretical and practical implications of these finding are discussed along with directions for future research. (shrink)

The effects of climate change are far reaching and widespread. As the issue continues to batter the world, the call for mitigation initiatives is becoming louder. In responding to this call we take a multidisciplinary approach to examining board diversity as an innovative solution in tackling climate change. Utilizing data from 69 fossil fuel organizations, our findings suggest that increasing female representation and foreign culture representation on the board can effectively reduce greenhouse gas emissions, the main contributor to climate change. (...) In part, this is achieved through responsible leadership and innovation. Our contributions reach beyond traditional board diversity literature, where the benefits of diversity are confined primarily to a discussion of corporate social responsibilities. Instead, we depict the benefits of board diversity as a direct lever in mitigating climate change. We propose that this is through the diversified board's enhanced ability to identify stakeholder needs and, subsequently, conceive of more effective and responsibly innovative solutions. (shrink)

This study examines the impact of the Chief Executive Officer ’s interlocking, created through serving on other companies’ audit committees and/or boards, on corporate social responsibility performance of the focal company and that of its linked companies. We find that CEO interlocking positively affects CSR performance of both the focal company and its linked companies. Further analysis shows that interlocks created by the CEO enhance CSR performance and in turn the financial performance of both the focal company and its linked (...) companies. Our findings are robust to a battery of analyses, including Heckman’s selection bias correction, propensity score matching, alternative measures of CSR performance, and CEO interlocks. These findings are important to regulators, company management teams, and other stakeholders with an interest in how the social ties of CEOs influence companies’ CSR performance and in the CSR–financial performance nexus. (shrink)

As global warming has received widespread attention, the disclosure of firms’ carbon information has been expected by increasing stakeholders. This study extends the previous literature on the determinants of firms’ carbon information disclosure by examining the influence of academic independent directors and Confucianism on the quality of carbon information disclosure. Using a sample of Chinese listed firms in the CSI 300 Index during the period of 2012–2018, our empirical results show that academic independent directors have a significantly positive association with (...) the quality of carbon information disclosure. The results also reveal that Confucianism positively affects the quality of carbon information disclosure. Moreover, Confucianism positively moderates the relationship between academic independent directors and the quality of carbon information disclosure. The results imply that Confucianism, as an informal system, can promote the governance effect of academic independent directors on firms’ carbon information disclosure behaviour. Our findings offer shareholders, regulators, and other stakeholders an integrating perspective on motivating firms to disclose high quality carbon information. (shrink)

Corporate social responsibility (CSR) is a concept aimed to ensure that corporations conduct their business in an ethical manner by taking care of their environment and human resources in addition to their economic impact. Often times, CSR refers to the steps undertaken by a corporation to measure its efforts to improve the environment and social well‐being. One of the aspects of CSR pertains to the disclosure of emission information and carbon management strategy (CMS). Carbon Management refers to analyzing and focusing (...) on those areas within the corporation where cost reductions can be made via energy reductions, waste management, and reduced resource consumption. In this article, we examine the role of an effective CMS on the emission disclosure behavior of firms. We utilize the carbon disclosure project surveys to find that firms adopting an effective CMS are more likely to disclose the information about both direct and indirect emissions. (shrink)

Enterprises are the market players for carbon reductions and carbon trading, and they are also the significant driving force in a low-carbon economy and society. Using the data of A-share listed companies from 2010 to 2016, this study uses a difference-in-differences model to examine the effects of the low-carbon city construction on corporate carbon reduction performance. Consistent with our hypotheses, we find that the low-carbon city construction promotes corporate carbon reduction performance. Further analysis indicates that the policy effect is stronger (...) for state-owned enterprises than non-state-owned enterprises. Moreover, environmental quality can affect the promotion of local government officials, which is more prominent in pilot low-carbon cities, and political promotion incentives significantly improve corporate carbon reduction performance. Furthermore, the highest emission reduction effects come in the fourth year after adopting a carbon reduction policy and are concentrated among the firms in the eastern region. Overall, our findings offer a new point view for a deeper understanding of the improvement of corporate carbon reduction performance, and provide microscopic evidence for the objective evaluation of the environmental effects of China's low-carbon city pilot policies. (shrink)

Prior research on sustainable supply chain management (SSCM) has almost exclusively focused on environmental aspects (GSCM—green supply chain management) and the study of its external drivers and consequences. Framing our study within the “strategy‐conduct‐performance” paradigm, we consider the focal firm's role in the implementation of sustainable supply chain initiatives, social as well as environmental. We use data on the S&P 500 Index retrieved from Bloomberg, including variables for two relevant focal firm strategies: (a) reducing the environmental footprint of the supply (...) chain and (b) reducing social risks in the supply chain (SRSS). Hierarchical logit modeling is carried out to examine the sequential impact of governance board characteristics and the focal firm's adoption of related internal policies and practices on the likelihood of implementing these initiatives along the supply chain. Controlling for industry, firm size, and resources, we find that board structure and diversity influence the implementation of sustainable supply chain initiatives by increasing organizational commitment to environmentally friendly and socially responsible policies and practices. Consequently, empirical evidence exists for the importance of strategic factors, namely a proactive corporate stance on sustainability associated with governance board characteristics, as antecedents of sustainable (environmental and social) supply chain initiatives. (shrink)

This study focuses on CEO hubris and its effect on corporate unethical behaviour—pollution in particular, and in addition examines critical institutional contingencies [state ownership, political connection and industrial competition] which may moderate this effect. With data from over-polluting listed firms based on the real-time pollution monitoring system in transitional China from 2015 to 2017, we find that CEO hubris is significantly positively related to firm pollution, and that the moderating role of SO is not significant, that PC positively moderates the (...) hubris–pollution relationship and that industrial competition negatively moderates this relationship. These findings contribute to research on the upper echelon theory, institutional theory and the growing literature on emerging economies. (shrink)

This research explores the dynamic capabilities required for firms to implement environmental, social, and governance strategies, and investigates sustainable management performance that can be created based on them. By using dynamic capabilities theory, we integrate sustainable management and the ESG literature to suggest a research model and identify the factors that act as the catalysts achieving sustainability. The data used for the analysis were collected from 78 firms listed on the Korea Exchange with assets totaling more than 2 trillion Korean (...) won. In this study, the partial least squares structural equation model is applied. We found that absorptive capability and adaptive capability significantly affect sustainable management performance through implementation of the ESG strategy as a mediating variable. In particular, a firm’s implementation of an ESG strategy is a significant determinant that impacts sustainable management performance. We also believe our model contributes to the current knowledge by filling several research gaps, and our findings offer valuable and practical implications not only for achieving sustainable growth but also for creation of competitive advantage. (shrink)

This study examines the influence of women’s board representation on the proportion of women senior managers in the United Kingdom (UK) from 1999 to 2019. We take a multi-theoretic approach, drawing on the trickle-down effect, critical mass theory, and agency theory, to explore several aspects of this topic. We find that more women on boards is associated with more women in senior management as suggested by the trickle-down perspective. We also find support for a critical mass effect; while one or (...) two women on a board is beneficial for advancing women into senior management, three or more women directors is more advantageous. Consistent with agency theory expectations, the relationship between women on boards and senior management gender diversity is driven almost entirely by women in non-executive, rather than executive, board positions, presumably as a result of the relative independence non-executive directors have compared to their executive director counterparts. Our study suggests that increasing women’s board appointments is a potential solution to the underrepresentation of women senior managers and may assist in building a pipeline for future CEO and board appointments. (shrink)

The readability of 10-K reports, in terms of linguistic complexity, determines the usefulness of information disclosure for stakeholders, particularly individual investors. Since investors largely depend on the financial communication in 10-K reports, firms have an ethical and legal responsibility to present disclosures in a language investors can understand. However, motivated by self-interest, managers obfuscate such disclosures to mask their own actions and hide unfavourable information. Building on the managerial obfuscation hypothesis grounded in stakeholder-agency and ethical-sensitivity theories, I hypothesize and empirically (...) test the relationship between board gender diversity and the readability of narrative disclosure in 10-K reports. Based on a relatively large sample of Russell 3000 firms for the years 2002–2018, I find a significant positive impact of BGD on 10-K reports’ readability, which in turn improves firm performance. Channel analysis reveals that the findings are driven by female independent directors, and their representation on audit and compensation committees; however, board activity does not appear to drive this relationship. Finally, I find that although gender discrimination in the appointment of directors spurs complex readability, the BGD-readability relationship is consistent in gender-biased and non-discriminant firms. I also check the robustness of our main empirical results in several ways. My study has important regulatory and managerial implications in that corporate governance is an important determinant of the readability of disclosure documents. (shrink)

This study investigates the effect of country-level emancipative forces on corporate gender diversity around the world. Based on Welzel’s theory of emancipation, we develop an emancipatory framework of board gender diversity that explains how action resources, emancipative values and civic entitlements enable, motivate and encourage women to take leadership roles on corporate boards. Using a sample of 6390 firms operating in 30 countries around the world, our results show positive single and combined effects of the framework components on board gender (...) diversity. Our research adds to the existing literature in a twofold manner. First, our integrated framework offers a more encompassing, complete and theoretically richer picture of the key drivers of board gender diversity. Second, by testing the framework empirically, we extend the evidence on national drivers of board gender diversity. (shrink)

PurposeThis study is justified by the economic importance of information on greenhouse gases, as well as the interest in the question of governance structure after the adoption of the objectives of the 2030 Agenda. The problem is also explained by the lack of research that has investigated the relationship between the best governance structure that contributes to achieving sustainability goals, including climate actions (SDG13) and clean energy adoption (SDG7) as part of the 2030 Agenda.Design/methodology/approachThe level of disclosure is measured on (...) the basis of the carbon disclosure score calculated by the carbon disclosure project (CDP). The study sample consists of 387 US companies that voluntarily participated in the CDP survey from 2011 to 2018. The authors use panel data analysis based on multiple regression models.FindingsThe results confirm the influential role of board size, director independence, the presence of women on the board and the presence of an environmental committee on carbon disclosure. In terms of carbon disclosure, the results suggest that a better governance structure is likely to reduce carbon emissions and improve carbon performance practices. Similarly, the analyses show a different representation of the role of corporate governance in high-carbon sectors compared to low-carbon sectors.Research limitations/implicationsThis study has some limitations. First, the sample is only interested in US companies that responded to the CDP questionnaire during the period 2011–2018. Thus, the results cannot be generalized to countries with different governance structures. Second, the data from this study on carbon disclosure, specifically focuses on CDP reporting to determine the carbon disclosure score. In this sense, the findings on information disclosed do not necessarily address disclosures through other media, such as a company’s website or a press release.Originality/valueSustainability and commitment to the sustainable development goals (SDGs) are more likely to exist in companies that have good governance and, in particular, a better board. The research is inspired by the SDGs. The study aims to examine the relationship between carbon disclosure and corporate governance in the context of SDGs. Indeed, this research work contributes to achieving sustainability goals, including climate actions (SDG13) and clean energy adoption (SDG7). (shrink)

Firms worldwide are increasingly required to disclose their carbon emissions due to the environmental damage associated with climate change. Because there has been no previous literature focusing on the determinants of corporate carbon disclosure integrating environmental legitimacy and green innovation, the present study attempted to develop an original framework to fill the research gap. This study explored the influence of environmental legitimacy on corporate carbon disclosure, and investigated the role of green innovation as a mediator. With the samples of Carbon (...) Disclosure Project in China from 2008 to 2012, the results demonstrate that environmental legitimacy significantly negatively influences the likelihood of corporate carbon disclosure, and that green process innovation mediates the relationship, while green product innovation has no significant mediating effect. It means that environmental legitimacy not only directly affects the likelihood of corporate carbon disclosure, but also indirectly affects it via green process innovation. Hence, companies must increase both informal and formal mechanisms, i.e., external environmental legitimacy and internal green process innovation, to engage in carbon information disclosure and ensure sustainability. (shrink)

We explore corporate environmental accountability by examining how carbon emissions affect voluntary climate-related information disclosure based on TCFD principles. Using computerized textual analysis to measure such climate-related disclosure, our results show that firms with higher levels of carbon emissions disclose more climate-related information. This relation is stronger in firms belonging to carbon-intensive industries, such as energy, materials, and utilities. We also examine this relationship at the category level for Governance, Strategy, Risk Management, and Metrics and Targets, finding that carbon emissions (...) drive disclosure in all categories except in Governance. Overall, our findings indicate that high carbon emitting firms appear to discharge their corporate accountability by increasing climate-related disclosure, consistent with legitimizing their potentially unethical actions and submitting to stakeholder and societal pressure. (shrink)

This paper presents a literature review offering a thorough and critical systematization of articles investigating the influence of women directors on corporate social performance (CSP). We review the state-of-the-art literature in terms of its key assumptions, theories, and conceptualization of CSP. Our analysis shows a misfit between the theorization and operationalization of gender diversity, especially in quantitative empirical studies, which represent the majority of articles. In our overview of both conceptual and empirical studies, we identified three main theoretical dimensions, which (...) are contingent upon board-level and institution-level dimensions. Based on our proposed framework, we call for future researchers to focus on novel research questions and innovative research designs to investigate women’s contributions to CSP and challenge the theoretical assumptions about the role of women on boards. (shrink)

This study examines how the CSR committee and CSR-linked executive compensation jointly affect CSR performance as governance mechanisms. Prior studies provided mixed results on the CSR committee’s effect on CSR performance. We posit that a CSR committee has both a direct and an indirect positive effect on CSR performance, with CSR-linked compensation playing the role of mediator in the relationship. We base our analysis on a sample of 164 Canadian firms covering the period 2012–2018, for a total of 952 firm-year (...) observations. We propose a regression-based approach for our mediation research design. Our findings reveal that CSR-linked compensation mediates the CSR committee’s positive effect on performance, but the type of mediation depends on whether the performance is social or environmental. We provide evidence of both direct and indirect effects on environmental performance but only a positive indirect effect on social performance. These results suggest that demands from the firm’s internal and external stakeholders are treated differently, with the former receiving priority. (shrink)

This study investigates whether audit partner gender is associated with the extent of auditor disclosure and the communication style regarding risks of material misstatements that are classified as key audit matters. Using a sample of UK firms during the 2013–2017 period, our results suggest that female audit partners are more likely than male audit partners to disclose more KAMs with more details after controlling for both client and audit firm attributes. Furthermore, female audit partners are found to use a less (...) optimistic tone and provide less readable audit reports, compared to their male counterparts, suggesting that behavioural variances between female and male audit partners may have significant implications on their writing style. Therefore, this study offers new insights on the role of audit partner gender in extended audit reporting. Our findings have important implications for audit firms, investors, policymakers and governments in relation to the development, implementation and enforcement of gender diversity. (shrink)

Cyber risk has become one of the greatest threats to firms in recent years. Accordingly, boards of directors must be continually vigilant about this danger. They have a duty to ensure that the companies adopt appropriate cybersecurity measures to manage the risk of cyber fraud. Boards should also ensure that the firm disclose material cyber risk and breaches. We examine how the board’s gender composition can influence the extent of such disclosure, based on a sample of the companies listed on (...) the S&P/TSX 60 Index over the period 2014–2018. Results show evidence of a positive association between the presence and level of cybersecurity disclosure and board gender diversity. However, the board must boast a critical mass of at least three women before this positive impact can be observed. Our findings contribute to the debate on the importance of gender diversity by adding the concept of the positive influence of heterogeneity on cyber disclosure. We also augment the literature on the critical mass of women in boardrooms by providing empirical evidence that three or more women constitute the threshold for better governance. Our study has important implications for investors, stakeholders and regulators. If investors wish to increase cybersecurity disclosure, they should ask for more diversified boards. Our findings support regulators in their efforts to increase women’s representation on boards by providing empirical evidence of better outcomes with this type of board composition. (shrink)

This study analyzes how the board’s characteristics could be associated with globally corporate social responsibility CSR and specific areas of CSR. It is drawn on all listed firms, in 2016, on the SBF120 between 2003 and 2016. Our results provide strong evidence that diversity in boards and diversity of boards globally are positively associated with corporate social performance. However, they influence differently specific dimensions of CSR performance. First, we show that large boards are positively associated with all areas of CSR (...) performance, while specific and overall CSR scores are negatively associated with CEO-chair structures. Second, board gender diversity is positively associated with human rights and corporate governance dimensions. Third, age diversity is positively associated with corporate governance, human resources, human rights, and environmental activities. Also, our results provide evidence that outside directors care about CSR performance. Specifically, the presence of foreign directors is positively associated with environmental performance and community involvement, whereas CSR-Governance dimension is positively associated with the presence of independent directors. Regarding the director’s educational level, post-graduated directors are positively and significantly associated with overall CSR score and all CSR sub-scores, except the corporate governance one. When directors have multiple directorships, they are more concerned about human resources, environmental performance, and business ethics. Finally, our findings are robust only in non-family firms. In fact, family boards are less diverse than non-family ones; specifically, they have a lower number of independent, foreign, and high-educated directors. (shrink)

In Japan, income, authority, and prestige are unequally distributed between men and women, even if they share the same occupational level. These inequalities are perceived as an ethical issue because they go against the principle of equal treatment at work. Nowadays, Japanese companies are under growing political and regulatory pressure to increase the hiring, promotion, and empowerment of female employees. In this context, the first equity index that tracks the financial performance of the best Japanese companies in terms of gender (...) diversity performance—the MSCI Japan Empowering Women Index —was launched in 2010. It aims to satisfy the growing demand of investors who want to reduce gender discrimination in Japanese workplaces. This paper compares the financial performance of the WIN stock index to the conventional parent index over the period 2010–2018, offering a unique setting to assess the effects of gender diversity screens on portfolio risk-adjusted performance. Our results are robust to a battery of risk-adjusted performance indicators and clearly indicate that investing in the WIN equity index does not come at a cost compared to investing in its conventional peer. This evidence is expected to reinforce confidence of investors who have an appetite for justice in increasing their investment in financial products that support the participation and the advancement of women in the Japanese workforce. (shrink)

This study empirically examines the relationship between wide-ranging board diversity and the quality of corporate social responsibility disclosure variables in Malaysia. We extend prior literature covering broader dimensions of board diversity and their impact on CSR after controlling for board and audit committee characteristics. Using 200 listed firms in Bursa Malaysia during 2009–2013 and applying both OLS and 2SLS instrumental variables approaches, we document significant positive effect of board education level and board tenure diversity on the quality of CSR disclosure. (...) Further analysis using robust regression also shows positive association between gender diversity and CSR disclosure. Our findings also demonstrate that the quality of CSR disclosure is significantly negatively associated with board age and nationality diversity. These results remain consistent with using alternative measures for board diversity, and characteristics for board of director and audit committees as well as split samples between large and small firms. Additional tests exhibit complementary relationship of education level and nationality with gender, while substitutive relationship of age and tenure with gender in influencing CSR. These findings provide useful insights into the policy makers in setting regulations in respect of board diversity in Malaysia and other emerging economies in the Asian region. Our evidence is also useful for listed companies in setting the criteria to identify directors who can support their strategic decisions. (shrink)

This paper examines how board gender diversity affects corporate risk disclosure. We exploit an exogenous shock on firms’ risk environment created by the United Kingdom’s vote to leave the European Union and analyze related risk disclosure in annual reports of public firms in the UK. Using this unique setting, we mitigate concerns about omitted variables in concurrent studies. The findings suggest that board gender diversity is positively related to corporate risk disclosure. However, our results also indicate that the proportion of (...) female directors needs to reach a critical mass to impact the risk disclosure decision. Moreover, we find lower bid–ask spreads immediately after the referendum date for those firms that disclosed Brexit-related risks in their annual reports prior to the vote. Collectively, our results are consistent with board gender diversity promoting the disclosure of decision-relevant information through improved board group dynamics. (shrink)

We combine research on business groups with the socioemotional wealth approach from family firm research to examine how family control of business group firms affects voluntary disclosure of environmental performance information. Theorizing that disclosing environmental performance information weakens the owning family’s control over its business group firm, but also generates reputational benefits, we expect family ownership and disclosure propensities to relate in a U-shaped way and, further, that this U-shape is accentuated for business group firms with a family CEO. Analysis (...) of longitudinal data on disclosure decisions of South Korean business group firms supports our theory and suggests that the effect of family control on environmental performance disclosure is neither good nor bad; instead, it depends on both the level of family ownership and whether a family CEO is in place. The finding that disclosure propensities are greatest when family control of business group firms is most extensive is provocative: it suggests that the very element that often is seen to encourage inefficiencies and fraud in business groups—family ownership combined with family leadership—can also be leveraged to foster responsible behaviors. (shrink)