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Longer board tenure and audit committee tenure. How do they impact environmental performance? A European study

Francesco Paolone, Matteo Pozzoli, Nicola Cucari and Rosario Bianco

Corporate Social Responsibility and Environmental Management, 2023, vol. 30, issue 1, 358-368

Abstract: We analyze the impact of board of directors (BoD) tenure and audit committee (AC) tenure on environmental performance (EP) to test whether BoD and AC members' rotation generates higher environmental performance. Data were collected from the Refinitiv Eikon database, structuring a sample of European Union (EU) listed companies belonging to the “old” country members in the period from 2018 to 2020. We found that longer board tenure and longer audit committee tenure each enhance environmental performance, demonstrating that firms could view the tenure rate as a proxy of the quality of the board monitoring. On the contrary, the interaction term (BoD and AC tenure) is negatively related to environmental performance, showing that when two boards have a low rotation, companies may achieve lower environmental performance. These findings help understand the dynamic and complex nature of tenure in corporate governance mechanisms.

Date: 2023
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Handle: RePEc:wly:corsem:v:30:y:2023:i:1:p:358-368