Search results
1 – 10 of over 29000Martin Stuebs and Li Sun
This chapter examines the association between corporate governance and environmental performance. The purpose of governance mechanisms is to build trust by ensuring that corporate…
Abstract
This chapter examines the association between corporate governance and environmental performance. The purpose of governance mechanisms is to build trust by ensuring that corporate responsibilities, including environmental responsibilities, are met. We obtain corporate governance data from the Investor Responsibility Research Center, Inc’s (IRRC’s) governance and director database and additional corporate governance and environmental performance data from Kinder, Lydenberg, and Domini’s (KLD’s) database. Our analyses document a significant positive association between corporate governance and environmental performance. Moreover, we find that corporate governance is positively related to environmental strengths, and negatively related to environmental concerns. Our findings contribute to and extend our understanding of the relationship between governance and performance and have important implications for policy makers, managers, investors, and others.
Details
Keywords
Marcellin Makpotche, Kais Bouslah and Bouchra B. M’Zali
The intensity of carbon emissions has led to the serious problem of global warming, and the consequences in terms of climatic disasters are gaining increasing attention worldwide…
Abstract
Purpose
The intensity of carbon emissions has led to the serious problem of global warming, and the consequences in terms of climatic disasters are gaining increasing attention worldwide. As the energy sector is responsible for most global emissions, developing clean energy is crucial to combat climate change. This study aims to examine the relationship between corporate governance and renewable energy (RE) consumption and explore the interaction between RE production and RE use.
Design/methodology/approach
The study adopts an econometric framework of a panel model, followed by the robustness check using alternative methods, including logit regressions. The bivariate probit model is used to analyze the interaction between the decision to use and the decision to produce RE. The analysis is based on a sample of 3,896 firms covering 45 countries worldwide.
Findings
The results reveal that appropriate governance mechanisms positively impact RE consumption. These include the existence of a sustainability committee; environmental, social and governance-based compensation policy; financial performance-based compensation; sustainability external audit; transparency; board gender diversity; and board independence. Firms with appropriate governance mechanisms are more likely to produce and use RE than others. Finally, while RE use positively impacts firm value and environmental performance, the authors find no significant effect on current profitability.
Originality/value
This study goes beyond previous research by exploring the impact of multiple governance mechanisms. To the best of the authors’ knowledge, this is also the first study examining the relationship between RE use and firm value. Overall, the findings suggest that RE transition requires, first of all, establishing appropriate governance mechanisms within companies.
Details
Keywords
Kathyayini Kathy Rao, Carol A. Tilt and Laurence H. Lester
The purpose of this paper is to investigate the relationship between environmental reporting and corporate governance attributes of companies in Australia.
Abstract
Purpose
The purpose of this paper is to investigate the relationship between environmental reporting and corporate governance attributes of companies in Australia.
Design/methodology/approach
The paper adopts a quantitative analysis approach. It examines the 2008 annual reports of the largest 100 Australian firms listed on the Australian Stock Exchange (ASX) to determine the amount of environmental reporting – these data are compared with various corporate governance measures.
Findings
Analysis found a significant positive relationship between the extent of environmental reporting and the proportions of independent and female directors on a board. The analysis did not, however, support a negative relationship between the extent of environmental reporting and institutional investors and board size as has been previously predicted, rather, it showed a positive relationship.
Originality/value
This paper offers insights to both regulators and company strategists. Regulators such as the Australian Stock Exchange (ASX) could consider expanding its Corporate Governance Council guidelines to include consideration of the environment, which is increasingly considered to be an important aspect of corporate social responsibility, and one of the responsibilities of the board of directors. In addition, for companies which include a commitment to the environment in their mission and strategies, it suggests consideration of the impact of board structure and composition is important as both of these are shown to have a significant effect on the amount of environmental information disclosed by companies.
Details
Keywords
Jun Hu, Wenbin Long, Xianzhong Song and Taijie Tang
Due to environmental externalities, micro-enterprises with profit-seeking features do not develop sufficient motivation for environmental governance. In a fiscally decentralized…
Abstract
Purpose
Due to environmental externalities, micro-enterprises with profit-seeking features do not develop sufficient motivation for environmental governance. In a fiscally decentralized system, local environmental protection authorities perform environmental supervision, and the intensity of the regulations that they implement has an important influence on corporate environmental governance. Based on the promotion tournament framework, this paper aims to discuss the driving mechanism of corporate environmental governance using turnover of environmental protection department directors (EPDDs) as an indicator.
Design/methodology/approach
Using samples of A-share companies listed on the Shanghai and Shenzhen exchanges from 2007 to 2014, this paper examines the impact of EPDD turnover on corporate environmental governance and its underlying mechanism.
Findings
The results show that corporate environmental governance exhibits a political periodicity that changes with the turnover of the EPDD, and the periodicity remains after controlling for the influence of changes in provincial party secretary and governor. Internal mechanisms analysis indicates that, without financial independence, local environmental protection departments rely on increasing sewage charges, not environmental protection subsidies, to promote corporate environmental governance. Further, considering heterogeneity among officials, it finds that the younger a new EPDD is, the more pronounced the periodicity of corporate environmental governance. However, there is no significant difference between in-system and out-system turnover.
Originality/value
In general, this paper describes the mechanisms of corporate environmental governance from the perspective of political economics, and the results have implications for the potential improvement of the government’s environmental supervision functions and the development of ecological civilization in China.
Details
Keywords
Marcellin Makpotche, Kais Bouslah and Bouchra M’Zali
This study aims to exploit Tobin’s Q model of investment to examine the relationship between corporate governance and green innovation.
Abstract
Purpose
This study aims to exploit Tobin’s Q model of investment to examine the relationship between corporate governance and green innovation.
Design/methodology/approach
The study is based on a sample of 3,896 firms from 2002 to 2021, covering 45 countries worldwide. The authors adopt Tobin’s Q model to conceptualize the relationship between corporate governance and investment in green research and development (R&D). The authors argue that agency costs and financial market frictions affect corporate investment and are fundamental factors in R&D activities. By limiting agency conflicts, effective governance favors efficiency, facilitates access to external financing and encourages green innovation. The authors analyzed the causal effect by using the system-generalized method of moments (system-GMM).
Findings
The results reveal that the better the corporate governance, the more the firm invests in green R&D. A 1%-point increase in the corporate governance ratings leads to an increase in green R&D expenses to the total asset ratio of about 0.77 percentage points. In addition, an increase in the score of each dimension (strategy, management and shareholder) of corporate governance results in an increase in the probability of green product innovation. Finally, green innovation is positively related to firm environmental performance, including emission reduction and resource use efficiency.
Practical implications
The findings provide implications to support managers and policymakers on how to improve sustainability through corporate governance. Governance mechanisms will help resolve agency problems and, in turn, encourage green innovation.
Social implications
Understanding the impact of corporate governance on green innovation may help firms combat climate change, a crucial societal concern. The present study helps achieve one of the precious UN’s sustainable development goals: Goal 13 on climate action.
Originality/value
This study goes beyond previous research by adopting Tobin’s Q model to examine the relationship between corporate governance and green R&D investment. Overall, the results suggest that effective corporate governance is necessary for environmental efficiency.
Details
Keywords
This study aims to explore the moderating role of corporate governance index between environmental disclosure and idiosyncratic risk.
Abstract
Purpose
This study aims to explore the moderating role of corporate governance index between environmental disclosure and idiosyncratic risk.
Design/methodology/approach
Governance index constructed on the basis of principle component analysis (PCA) that comprised Board Duality (BD), Board Size (BS), Board Independent (BI) and Board Meeting (BM). Collected panel data of 103 nonfinancial companies listed in stock exchanges of Pakistan and India for the period 2013–2020. To address the issue of endogeneity, this study used generalized methods of moments (GMM).
Findings
This study revealed that corporate governance index negatively modifies the relationship between environmental disclosure and idiosyncratic risk for both Pakistan and India scenario. Findings of the study also disclosed environmental disclosure has positive significant impact on idiosyncratic risk in case of Pakistan, whereas it has a negative significant impact in case of India.
Research limitations/implications
The major limitation of the study is availability of environmental disclosure data, future researchers may extend time period and add other emerging economies for analysis. Moreover, assumption of objectivity in the evaluation of environmental disclosure is another limitation of the study. Future research should examine the standard of environmental actions that businesses declare. This study used CAPM model to measure idiosyncratic risk, and future studies suggest measure idiosyncratic risk by using Fama & French four and five factors model for better results and robustness.
Practical implications
Study provides guidelines to investors for choosing stock for investment and also helpful for management to minimize agency problems through better governance mechanisms. Furthermore, study has deep implications for CEOs, portfolio managers, researchers and academics.
Originality/value
The study intended to empirically examine the moderation of Corporate Governance Index between the relationship of Environmental Disclosure and Idiosyncratic Risk.
Details
Keywords
Denis Cormier and Michel Magnan
The purpose of this paper is to explore the relationships between corporate social responsibility (CSR) disclosure, corporate governance and financial analysts’ information…
Abstract
Purpose
The purpose of this paper is to explore the relationships between corporate social responsibility (CSR) disclosure, corporate governance and financial analysts’ information environment, as proxied by their ability to forecast a firm’s earnings. Hence, we extend prior voluntary disclosure research.
Design/methodology/approach
Our paper considers that the determination of CSR disclosure, corporate governance and financial analyst forecasting work are closely intertwined. Therefore, we rely on simultaneous equations to explore these relations.
Findings
Findings show that there is a direct relation between both CSR disclosure and corporate governance and financial analysts’ information environment: more disclosure and better governance translate into a tighter consensus in earnings forecasts as well as less dispersion. However, corporate governance substitutes for CSR disclosure in improving analyst forecast precision, thus supporting a comprehensive view of corporate governance that encompasses disclosure. Finally, results also suggest that CSR disclosure, through its effect on governance and analyst following, has an indirect influence on analyst forecast precision. Overall, it appears that both CSR disclosure and good corporate governance attract analysts and improve their ability to forecast earnings.
Originality/value
To the best of our knowledge, our study is the first to investigate the joint effect of corporate governance and CSR disclosure on analyst forecast precision.
Details
Keywords
Denis Cormier and Charlotte Beauchamp
This study aims to assess the informativeness of carbon emission data for the stock markets and the mediating role played by financial analysts and the quality of the governance…
Abstract
Purpose
This study aims to assess the informativeness of carbon emission data for the stock markets and the mediating role played by financial analysts and the quality of the governance on this issue.
Design/methodology/approach
Relying on structural equation modelling, the authors assess the relation between embedded CO2 disclosure or CO2 emissions disclosure and the stock market valuation (Tobin Q), considering the mediating roles played by financial analysts (external monitoring) and corporate governance (internal monitoring).
Findings
Results based on a sample of North American firms in the oil and gas industry are the following. The disclosure of embedded CO2 is negatively associated with a firm’s market value, but this association is mediated by analyst following and corporate governance. The disclosure of yearly CO2 emissions is also negatively related to stock market value, while corporate governance mediates this negative impact, and analysts following does not. Considering that yearly CO2 emissions represent short-term environmental risks, whereas embedded CO2 represents long-term environmental risks, it appears important to consider embedded CO2 when studying the impact of carbon disclosure on firm value. The authors also show that a firm’s environmental performance (measured by Carbon Disclosure Project – CDP) is positively associated with two mediating variables (i.e. analyst following and corporate governance).
Originality/value
The study results suggest that CO2 emissions information is less relevant than embedded CO2 in attracting financial analysts when they are assessing a firm’s value because it represents short-term environmental risks, whereas embedded CO2 represents long-term environmental risks. Therefore, the authors consider important to include embedded CO2 when studying the impact of environmental disclosure on a firm’s value.
Details
Keywords
This paper aims to verify whether the integration of sustainability in executive compensation positively affects firms’ non-financial performance and whether corporate governance…
Abstract
Purpose
This paper aims to verify whether the integration of sustainability in executive compensation positively affects firms’ non-financial performance and whether corporate governance characteristics enhance the relationship between sustainability compensation and firms’ non-financial performance and to expand the domain of the impact of sustainability on non-financial performance.
Design/methodology/approach
This analysis is based on a sample of companies listed on the Milan Italian Stock Exchange from the Financial Times Milan Stock Exchange Index over the 2016–2020 period. Regression analysis was used by using data retrieved from the Refinitiv Eikon database and the sample firms’ remuneration reports.
Findings
The findings of this paper show that embedding sustainability in executive compensation positively affects firms’ non-financial performance. The results of this paper also reveal that specific corporate governance features can improve the impact of sustainability on non-financial performance.
Research limitations/implications
This analysis is limited to Italian firms included in the Financial Times Milan Stock Exchange Index; however, the findings are highly significant.
Practical implications
The findings provide regulators with useful insights for considering the integration of sustainability goals into executive remuneration. Another implication is that policymakers should require – at least – listed firms to fulfil specific corporate governance structural requirements. Finally, the findings can provide investors and financial analysts with a greater awareness of the role played by executive remuneration in the long-term value-creation process.
Originality/value
This paper contributes to addressing the relationship among sustainability, remuneration and non-financial disclosure, drawing on the stakeholder–agency theoretical framework and focusing on Italian firms. This issue has received limited attention with controversial results in the literature.
Details
Keywords
Mohamed Toukabri and Mohamed Ahmed Mohamed Youssef
This study is justified by the economic importance of information on greenhouse gases, as well as the interest in the question of governance structure after the adoption of the…
Abstract
Purpose
This study is justified by the economic importance of information on greenhouse gases, as well as the interest in the question of governance structure after the adoption of the objectives of the 2030 Agenda. The problem is also explained by the lack of research that has investigated the relationship between the best governance structure that contributes to achieving sustainability goals, including climate actions (SDG13) and clean energy adoption (SDG7) as part of the 2030 Agenda.
Design/methodology/approach
The level of disclosure is measured on the basis of the carbon disclosure score calculated by the carbon disclosure project (CDP). The study sample consists of 387 US companies that voluntarily participated in the CDP survey from 2011 to 2018. The authors use panel data analysis based on multiple regression models.
Findings
The results confirm the influential role of board size, director independence, the presence of women on the board and the presence of an environmental committee on carbon disclosure. In terms of carbon disclosure, the results suggest that a better governance structure is likely to reduce carbon emissions and improve carbon performance practices. Similarly, the analyses show a different representation of the role of corporate governance in high-carbon sectors compared to low-carbon sectors.
Research limitations/implications
This study has some limitations. First, the sample is only interested in US companies that responded to the CDP questionnaire during the period 2011–2018. Thus, the results cannot be generalized to countries with different governance structures. Second, the data from this study on carbon disclosure, specifically focuses on CDP reporting to determine the carbon disclosure score. In this sense, the findings on information disclosed do not necessarily address disclosures through other media, such as a company’s website or a press release.
Originality/value
Sustainability and commitment to the sustainable development goals (SDGs) are more likely to exist in companies that have good governance and, in particular, a better board. The research is inspired by the SDGs. The study aims to examine the relationship between carbon disclosure and corporate governance in the context of SDGs. Indeed, this research work contributes to achieving sustainability goals, including climate actions (SDG13) and clean energy adoption (SDG7).
Details