The moderating effect of corporate governance on the relationship between corporate sustainability performance and corporate financial performance

Lucy W. Lu ()
Additional contact information
Lucy W. Lu: Bradley University

International Journal of Disclosure and Governance, 2021, vol. 18, issue 3, No 1, 193-206

Abstract: Abstract Corporate governance plays an important role in monitoring and counseling management’s decision making including strategic sustainability investing. Understanding the role of corporate governance may help top management of corporations allocate their limited resource in their strategic planning and decision making. This study examines the relationship between corporate governance and corporate sustainability performance (CSP) and whether corporate governance moderates the relationship between corporate sustainability performance and corporate financial performance (CSP–CFP). The study analyzes a sample of 456 top largest U.S. public companies to examine corporate sustainability performance and corporate governance jointly, particularly the moderating effect of corporate governance on CSP–CFP relationship. Lagged variables were used to address the endogeneity issue. Multiple regression methods were used. The results show that firms with stronger corporate governance are more likely to have higher CSP and that corporate governance contributes additional value to firm value. The impact of CSP on CFP is higher for firms with stronger corporate governance (moderating effect). Results are robust after using different regression methods and additional tests.

Keywords: Corporate governance; Corporate sustainability performance; Corporate financial performance; Moderating effect (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1057/s41310-020-00099-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:ijodag:v:18:y:2021:i:3:d:10.1057_s41310-020-00099-6

Ordering information: This journal article can be ordered from
https://www.palgrave.com/gp/journal/41310

DOI: 10.1057/s41310-020-00099-6

Access Statistics for this article

International Journal of Disclosure and Governance is currently edited by Michael Alles

More articles in International Journal of Disclosure and Governance from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().