The inconclusiveness of previous research on the association between gender diverse boards and corporate social performance has led us to revisit the question in light of stakeholder management and institutional theories. Given that corporate social responsibility is a multidimensional concept, we test the influence of GDB on various groups of stakeholders. By considering the interaction between stakeholders’ power and directors’ personal motivations toward the prioritization of stakeholders’ claims, we find that GDB are positively related to CSR dimensions that are related (...) to less powerful stakeholders such as the environment, contractors, and the community. However, GDB do not appear to have a significant impact on CSR dimensions that are associated with stakeholders who benefit from more institutionalized power, such as employees and customers. (shrink)

Firms have traditionally responded to environmental violations by increasing information disclosure and/or communication to manage stakeholder perceptions. As such, these approaches may be symbolic in nature, with no genuine intention to improve the environment. We draw from restorative justice grounded in stakeholder theory and explore a relatively new approach in the form of supplemental environmental projects aimed at restoring the environment, and empirically examine the role of corporate governance in firms’ decisions to undertake reparative actions. Using environmental violations and SEPs (...) data from the US Environmental Protection Agency between 2002 and 2015, we find that firms with smaller boards are more likely to undertake SEPs. We also find that firms with higher board independence and CEO duality undertake SEPs more frequently; however, board gender diversity and the existence of a sustainability committee appear to have no impacts. These results are robust to propensity score matching and an alternative data source. We extend the scope of stakeholder theory by emphasizing a new approach—restorative justice—by which corporations can repair damaged relationships and also improve the environment. We also contribute to corporate governance and environmentalism literature by identifying governance structures that promote environmental restorative justice. Thus, our study will inform different stakeholders, including regulators, shareholders, and boards of directors, and will open new avenues for business ethics scholarship. (shrink)

While the economic and environmental dimensions of the triple bottom line have been covered extensively by management theory and practice, the social dimension remains largely underrepresented. The resource-based view of the firm and the natural resource-based view of the firm are revisited to lay the theoretical foundation for exploring how the social dimension might be addressed. Social capabilities are then explored by looking at the social entrepreneurship literature and illustrative cases with the purpose of elaborating RBV toward a social resource-based (...) view of the firm. Three illustrative cases, which represent social businesses located in catastrophe-ridden Haiti, show how capabilities are used to overcome challenging constraints. The goal for the social entrepreneur is to employ the appropriate capabilities to ensure economic success, a positive environmental impact, and social benefits that leave the local community in a better position than without the business. Just as NRBV is a previous elaboration of RBV, so can SRBV be an elaborated theoretical foundation for future research. The components of a theory are systematically addressed by extending the range of variables, extending the domain, and offering propositions on variable relationships and outcome predictions. By highlighting the social capabilities of social entrepreneurs, this research illuminates the micro-foundations of corporate social responsibility, emphasizing the value of individual level analyses. (shrink)

Addressing climate change is among the most challenging ethical issues facing contemporary business and society. Unsustainable business activities are causing significant distributional and procedural injustices in areas such as public health and vulnerability to extreme weather events, primarily because of a distinction between primary emitters and those already experiencing the impacts of climate change. Business, as a significant contributor to climate change and beneficiary of externalizing environmental costs, has an obligation to address its environmental impacts. In this paper, we explore (...) the role of firms’ climate change targets in shaping their emissions trends in the context of a large multi-country sample of companies. We contrast two intentions for setting emissions reductions targets: symbolic attempts to manage external stakeholder perceptions via “greenwashing” and substantive commitments to reducing environmental impacts. We argue that the attributes of firms’ climate change targets are diagnostic of firms’ underlying intentions. Consistent with our hypotheses, while we find no overall effect of setting climate change targets on emissions, we show that targets characterized by a commitment to more ambitious emissions reductions, a longer target time frame, and absolute reductions in emissions are associated with significant reductions in firms’ emissions. Our evidence suggests the need for vigilance among policy-makers and environmental campaigners regarding the underlying intentions that accompany environmental management practices and shows that these can to some extent be diagnosed analytically. (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 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)

This paper presents an examination of the relationship between the presence and composition of a corporate social responsibility (CSR) committee on the corporate governance board and CSR decoupling. Using a sample of listed firms drawn from 41 countries, we found that the presence of a CSR committee on the corporate board is negatively associated with CSR decoupling. We also noted that the nature of the industry to which a firm belongs, a firm's level of CSR orientation, and corporate governance quality (...) strengthen such association. Further analysis of the relationship between the structure of the CSR committee and CSR decoupling shows that larger CSR committee size and a greater independence and longer tenure of its members negatively affect CSR decoupling. Our results are robust to various alternative specifications and offer important research and managerial implications. The findings of this study contribute to the growing literature on corporate governance and CSR. (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)

In the years 2009 to 2016, approximately 35% of Standard & Poor’s (S&P) 500 firms had at least one director with a professional background in private, not-for-profit organizations (NGO director). Yet research provides little guidance on what kind of firms are more likely to have NGO directors on their boards, neither do we know these directors’ effects on firm strategic outcomes. Our study examines the above two questions in the context of corporate social responsibility (CSR), taking the lens of resource (...) dependence theory. Results from an analysis of all firms included in the S&P 500 index between 2010 and 2016 show that the number of NGO directors serving on a firm’s board in a certain year is positively related to the extent to which the firm displays poor CSR performance in the prior year. We also find that NGO directors on boards are not associated with immediate improvements in CSR performance; rather, their positive influence on CSR performance takes hold after 3 years. Our findings suggest that whereas NGO directors may potentially be appointed to a firm’s board for legitimization reasons, these directors are associated with enhanced CSR performance in the long term. (shrink)

Using an institutional perspective, this paper investigates how consumers in Western developed and Southeast Asian emerging markets respond to fashion brands’ moral transgressions and how consumers’ moral rationalization tendencies vary across the two markets. The study employs multimethod analyses, including cross-national secondary data from 12 countries and experimental data from 940 German and Vietnamese consumers. In a non-transgression context, the multivariate analyses show that Western developed-market consumers embrace higher ethical standards (Study 1A), tend to seek collective action against prevalent immoral (...) behaviors in society (Study 1B), and are more critical in evaluating fashion brand ethicality than Southeast Asian emerging-market consumers (Study 2). However, in a transgression context, the moderated mediation analyses reveal that consumers largely do not differ in their direct devaluation of fashion brand ethicality and subsequent price considerations (Study 3) across six transgression scenarios (i.e., worker abuse, child labor, racist advertising, weight discrimination, climate change, and environmental pollution). Interestingly, moral rationalization processes appear to be more frequent and consequential in the Southeast Asian emerging market, while they either do not occur or are significantly weaker in the Western developed market. The results provide theoretical and practical implications for ethical business practices in the fashion industry based on market differences in regulatory frameworks, cognitive considerations, and social norms. (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)

This study examines the influence of firm governance structures (board size, independence, CEO duality, director share ownership, and board meeting frequency) in relation to carbon emission disclosures by high-polluting Chinses firms. In addition, the study further examined the moderating role of earnings management on this relationship. In line with stakeholder and agency theories, our study identified that the large and independent boards exercise and demonstrate a higher degree of carbon emission disclosures. However, CEO duality and director share ownership are associated (...) with lower carbon emission disclosures. In addition, the study determined that higher earnings management results in a reduced level of carbon emission disclosures. Lastly, a firm earnings management strategy moderates the relationship between a firm governance structure and its carbon emission disclosures. The findings from the study are consistent with multiple econometric models and variables. The findings from the study contribute to the literature in the areas of firm corporate governance and carbon emission disclosures by documenting the moderating role of earnings management, which is not evident in previous studies; provide an enhanced perspective on the implications for firms, regulators, policymakers, and stakeholders who have an interest in reducing carbon emissions and advancing climate change mitigation goals in line with UN's Sustainable Development Goal (SDG) 7: climate action, and zero emissions goal by 2050. (shrink)

This paper presents a study on how corporate social responsibility (CSR) strategies create value amongst family and non-family firms. Additionally, in our study, we considered the moderating effect of independent directors on the relationship between CSR and firm value. Based on data drawn from companies operating in 61 countries over an 11-year period (i.e. from 2010 to 2020), our findings demonstrate that non-family firms derive market benefits from the governance improvements made by independent directors concerning CSR strategies. In contrast, the (...) CSR strategies promoted within family firms are associated with lower firm value. However, this negative association is neutralised by the role played by independent directors, especially when the company is controlled by succeeding generations and not just by the founding one. These directors play a dissuasive role that leads family members to reassess their external socio-emotional preferences (reputation, image, etc.) in order to uphold the internal priorities of day-to-day decision-making. Our study has important implications for research and practice. (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)

Investor behavior is worth investigating as industries and institutions are concerned about spelling out environmental and social sustainability issues. The stream of research in environmental and social sustainabilities is from the points of view of institutions and policy. Nonetheless, environmental and social sustainability issues are based on individual levels, especially investors and their value. This study investigates whether moral attentiveness plays a role in financing orientation and investment propensity relationships. This research used an experimental method with a between-subject 2 × (...) 2 factorial design. The financing orientation variable was manipulated into two, i.e., green financing orientation with a marginal interest rate and red financing orientation with a high interest rate. The moral attentiveness variable was classified into two, i.e., high and low levels. The results showed that investors in the emerging country showed a propensity to invest more in a red financing orientation condition with a high interest rate compared to that in a green financing orientation with a marginal interest rate. It was on pace with the interdisciplinary perspective of the hierarchy of needs that in emerging countries, one of the forceful elements underlying investment decisions was the monetary element to cater to primary (physiological) conditions. Meanwhile, from a utilitarian perspective, green financing with a marginal interest rate was more ethical than red financing with a high interest rate. It was because green financing gave more benefits to the environment and society. Moral attentiveness could filter the adverse impacts of financing orientation on investment propensity. This research will help policymakers and stakeholders drive investors’ awareness about the industry’s benefits to sustainability and promote the green revolution to a competitive market structure. (shrink)

There is an important research tradition concerning the financial implications of social and environmental ethics. This study investigates the short- and long-term financial performance of ventures with explicit environmental commitments seeking to raise funds in equity crowdfunding (ECF) markets. Our results indicate that environmental orientation positively influences short-term funding performance, though only when accompanied by the costly signal of robust corporate governance mechanisms. In the long run, environmental orientation also positively impacts performance, albeit with only weak statistical significance when observed (...) alone. Governance again serves as a positive moderator, but its effect is less significant relative to the short term. However, environmental orientation does feature a strongly significant positive impact on long-run performance when combined with a successfully conducted initial ECF campaign. (shrink)

The executives of listed firms play an important role in the fulfillment of corporate social responsibility. Based on behavioral consistency theory, this study examines the association of CSR performance among multiple firms for the same executive served at different times. By tracking the movement of executives across Chinese listed firms over the period 2010–2019, we find that there is a significantly positive association between the predecessor and the successor firm’s CSR performance for the same executive, implying that an individual’s value (...) and preference for CSR maintain consistency within a certain period of time. We also find that a longer employment gap and lower internal control effectiveness will damage the association of CSR performance between the predecessor and the successor firm. Our results are robust to testing in subsamples and controlling the endogeneity problems. Our conclusion provides a new perspective to understand the influence mechanism of CSR performance in the context of inter-firm executive mobility and provides empirical evidence for listed firms to improve their decision-making in hiring and evaluating executives. (shrink)

The purpose of this research is to explore corporate governance and CEO remuneration with banks capitalization strategies and payout policy within the Pakistani banking context. Data were obtained from the financial statements of scheduled banks listed on the Pakistan stock exchange from 2005 to 2020. The findings of the research study revealed that corporate governance mechanisms that promote the bank's shareholders' interests are linked to low capitalization strategies. The size of the board of directors has a significant impact on the (...) capitalization of banks. Banks' capitalization techniques are also adversely correlated with effective board size. The shareholder benefits from low capitalization. Corporate governance is positively related with banking sector instability, as seen by this negative correlation. Bank capitalization strategies have a significant impact on CEO remuneration. In the event of an income shock, dividend payout is essential. Banking sector payout policies are negatively related with corporate governance. In the event of a negative income shock, financial institutions reduce dividends. As a result, it has been argued that effective corporate governance benefits shareholders by reducing capitalization tactics and limiting financial institutions' aggressive payouts.JEL classificationG21, G30, G32, G35. (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)