Does a board of directors enhance sustainable development? Evidence from emerging economies in Southeast Asia

Linh-TX Nguyen

Accounting Research Journal, 2025, vol. 38, issue 2, 230-244

Abstract: Purpose - This study empirically examines the relationship between board effectiveness and corporate sustainability performance through the lens of agency and stakeholder theories to determine whether a board of directors enhances sustainable development. Design/methodology/approach - The author uses best practices from Institutional Shareholders Services (2016) to develop a firm-specific board index that integrates four key attributes, including board size, board independence, board leadership structure and the presence of an audit committee. The analysis uses fixed-effects regressions on a sample of 535 listed non-financial firms in emerging Southeast Asian markets. Findings - The findings demonstrate that an effective board can enhance corporate sustainability performance. Among the four board attributes, the author finds that an optimal board size, a majority of independent directors and the establishment of an audit committee contribute to improved corporate sustainability performance. However, there is no impact of CEO duality on sustainable development. Originality/value - The author contributes to the literature by proposing a comprehensive firm-specific board index to evaluate board effectiveness, clarifying the attributes of a well-functioning corporate board. Additionally, our research emphasizes the crucial role of a well-functioning board of directors in enhancing sustainable development, particularly in emerging Southeast Asian markets.

Keywords: Board index; Corporate sustainability performance; Emerging markets; Southeast Asia (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-03-2024-0115

DOI: 10.1108/ARJ-03-2024-0115

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