Board skill diversity and corporate environmental responsibility: the moderating effects of formal andinformal pressures

Chunli Liu and Jing Cheng

Sustainability Accounting, Management and Policy Journal, 2024, vol. 16, issue 1, 165-189

Abstract: Purpose - This study aims to investigate the impact of board skill diversity (BSD) on corporate environmental responsibility (CER). In addition, this study explores the moderating effects of formal regulatory pressure and informal media pressure. Design/methodology/approach - This study uses Chinese high polluting companies as the sample and uses regression analysis. Robustness checks, including instrumental variable regression, Heckman two-stage model and propensity score matching method, are performed to test the robustness of the results. Findings - The findings suggest that BSD significantly improves CER performance. Both formal regulatory pressure and informal media pressure strengthen the positive impact of BSD on CER. Further channel analyses reveal that BSD improves CER performance by promoting corporate proenvironmental behaviors rather than by restricting environmental violations; skill diversity of executive directors has a more significant effect on CER than that of independent directors. Finally, the moderating effect of regulatory pressure is only significant after the implementation of the Environmental Protection Law, and the moderating effect of media pressure mainly concentrates on negative media coverage. Practical implications - The involvement of directors with more diverse skills is essential to improve corporate proenvironmental behaviors. Companies should select qualified directors with different skills to further improve their performance on environmental protection and sustainable development. Social implications - Regulators and standard-setters should develop efficient guidelines on corporate board governance to enhance the positive role of companies in environmental and sustainable development. Originality/value - This study broadens the research on the determinants of CER by examining the influence of BSD on CER and the moderating roles of various stakeholder pressures, thereby providing a deeper understanding of corporate environmental performance and sustainable development.

Keywords: Board skill diversity; Corporate environmental responsibility; Regulatory pressure; Media pressure (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-08-2023-0597

DOI: 10.1108/SAMPJ-08-2023-0597

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