Do market investors value the directors’ expertise and independence of a corporate sustainability committee? Empirical evidence from Taiwan

Wen-Chi Sun and Hua-Wei Huang

Finance Research Letters, 2024, vol. 61, issue C

Abstract: This study examines whether market investors value the voluntary establishment of a sustainability committee and whether the sustainability committee directors’ characteristics drive the stock market reaction. This study uses 217 observations of Taiwanese firms for 2006–2023 and finds significantly negative cumulative abnormal stock returns (CAR) around the date of the public announcement of the sustainability committee establishment, supporting investors’ concerns over the high costs associated with establishing a sustainability committee. In addition, the committee director's expertise and independence effectively mitigated negative CAR, showing that investors reward the expertise and independence of such a sustainability committee despite the high costs.

Keywords: Market reaction; Sustainability committee establishment; Committee director's characteristics (search for similar items in EconPapers)
JEL-codes: M14 M48 Q56 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000886

DOI: 10.1016/j.frl.2024.105058

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