Environmental Concern, Regulations and Board Diversity

Quynh Do, Ngan Duong Cao, Dimitrios Gounopoulos and David Newton

Review of Corporate Finance, 2023, vol. 3, issue 1-2, 99-148

Abstract: Despite an increasing need for trustworthy ESG data and pressure from worldwide authorities to mandate climate disclosure, the Securities and Exchange Commission (SEC) has been sluggish to respond to the demand of investors for a more holistic approach. Our study demonstrates unique research setting in the context of local state implementation of the Regional Climate Action Plan Initiative (RAC). The empirical analysis reveals a positive correlation between RAC and environmental corporate social responsibility (CSR) for enterprises with a diverse board of directors, as defined by the Blau index. It indicates that a high-diversified board triggers an improvement in a firm’s environmental performance on average in the period following RAC. Additionally, we demonstrate that firms with a less diverse board of directors were more prone to over-invest in environmental CSR during the financial crisis. In general, this research illustrates the importance of factors other than market forces in determining ESG disclosure, such as local climate policy.

Keywords: Diversity; regulatory impact; board of directors (search for similar items in EconPapers)
JEL-codes: G34 G39 M14 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlrcf:114.00000037

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