The influence of board characteristics on environmental performance: evidence from East Asian manufacturing industries

Linh-TX Nguyen and Cuong-Le Thanh

International Journal of Emerging Markets, 2021, vol. 17, issue 10, 2702-2720

Abstract: Purpose - The purpose of this study is to examine the influence of board characteristics on environmental performance in manufacturing firms of the emerging East Asian markets. The authors adopt a triple perspective of environmental performance that focusses on three major environmental areas including resource reduction, emission reduction and product innovation. Design/methodology/approach - The authors consider three main board characteristics, namely, board size, board independence and board leadership structure, and investigate their impacts on a multidimensional construct of environmental performance. Specifically, both linear and quadratic functions are applied to address a possibility of the non-linear relationship between board size and environmental performance. The authors use fixed-effects estimations on a sample of manufacturing firms in the emerging East Asian countries between 2011 and 2016. Findings - The study explores an inverseU-shaped relationship between board size and environmental performance. The authors also reveal that manufacturing firms are more likely to have better environmental performance when the proportion of independent directors on board increases. However, the separation of CEO and board chair roles has no impact on environmental performance. Practical implications - The findings have important implications by identifying the role of a board of directors in implementing environmental protection strategies and by providing a foundation for corporate efforts to enhance sustainable development. Originality/value - The study provides complete understanding of environmental performance as a multidimensional construct and sheds light on the influence of board characteristics, especially the inverseU-shaped influence of board size, on environmental performance in the East Asian manufacturing industries.

Keywords: Agency theory; Board of directors; Emerging East Asia; Environmental performance; Inverse U-shape; Manufacturing industries; Stakeholder theory (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoemp:ijoem-07-2020-0744

DOI: 10.1108/IJOEM-07-2020-0744

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