The impact of the board of directors on corporate social performance: a multivariate approach

Camélia Radu, Nadia Smaili and Adela Constantinescu

Journal of Applied Accounting Research, 2022, vol. 23, issue 5, 1135-1156

Abstract: Purpose - This study investigates the relation between the board of directors' attributes and corporate social performance. The authors examine three board of directors: characteristics, size, independence and gender diversity, and how they interact with industry to affect corporate social performance. Design/methodology/approach - The authors use a multivariate approach to analyze and compare the effects of governance variables on two aspects of corporate social performance, its environmental and social dimensions. Findings - Based on a sample of 983 firm-year observations, our main findings indicate that board independence, size and gender diversity each has a different impact on the environmental and social dimensions of performance, but that industrial sector moderates these effects. In particular, our results show that board member independence is positively associated with the environmental dimension of the performance of all the sample industries, but only has a positive association with the social dimension when the firms are in industries other than those that are environmentally sensitive. For these latter industries, board independence is negatively associated with the social dimension. Board size is positively associated with the environmental dimension for environmentally sensitive industries only and with the social dimension for all the industries examined, with a stronger positive effect on the latter in regard to environmentally sensitive industries. Research limitations/implications - Women directors appear to raise social and environmental concerns within the board, as evidenced by their positive effect on the firms' social and environmental performance, with a stronger impact on the former. Practical implications - Regulators can promote changes to the way Canadian companies select directors for the purpose of achieving sustainable performance while investors will be better informed about the impact of some of the board attributes on the environmental and social dimension of performance. Originality/value - This study provides a portrait of the impact of governance attributes on the environmental and social dimension of performance of Canadian companies. Given the increasing interest in gender diversity in recent years, this study provides new evidence on the benefits of female board members for the two non-financial dimensions of performance.

Keywords: Sustainability; Corporate social performance; Social performance; Environmental performance; Board of directors; Gender diversity (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:jaar-05-2021-0141

DOI: 10.1108/JAAR-05-2021-0141

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