Board Attributes,Corporate Social Responsibility Strategy,and Corporate Environmental and Social Performance

In this paper, we draw on insights from theories in the management and corporate governance literature to develop a theoretical model that makes explicit the links between a firm’s corporate social responsibility (CSR) related board attributes, its board CSR strategy, and its environmental and social performance. We then test the model using structural equation modeling approach. We find that the greater the CSR orientation of the board (as measured by the board’s independence, gender diversity, and financial expertise on audit committee), the more proactive and comprehensive the firm’s CSR strategy, and the higher its environmental and social performance. Moreover, we find this link to be endogenous and self-reinforcing, with superior CSR performers tending to further strengthen their board CSR orientation. This result while positive is also suggestive of the widening of the gap between the leads and laggards in CSR. Therefore, the question arises as to how ‘leaders’ are using their superior CSR competencies seen by many scholars as a source of corporate (at times unfair) competitive advantage. Stakeholders of corporations therefore need to be cognizant of this aspect of CSR when evaluating a firm’s CSR activities. Policy makers also need to be cognizant of these concerns when designing regulation in this field.     

Board Meeting Attendance by Outside Directors

Outside directors’ regular board meeting attendance is important in improving the effectiveness of a governance system. Such attendance is evidence of their commitment to the firm as key other players in monitoring and decision making. Using a unique dataset for Korean firms, and three-level random coefficients models, we find that, foreign outside directors, an independent appointment process, professional knowledge of business operations and accumulated firm-specific knowledge are important factors that affect outside directors’ attendance of board meetings. The results also confirm that both outside directors’ personal characteristics and the social context are crucial in understanding their board meeting attendance. Further analysis shows that a positive corporate environment that supports the outside director system encourages outside directors’ attendance at board meetings.     

Doing Good Business by Hiring Directors with Foreign Experience

Using a manually collected dataset on the overseas experiences of directors of Chinese listed firms, we examine the effects of returnee directors on firms’ corporate social responsibility (CSR) engagement. Our results show that returnee directors significantly improve their firms’ CSR engagement. The positive relationship between the percentage of returnee directors and CSR engagement is more significant when a firm is in a competitive industry, when a firm has no government ownership, when a firm’s CEO is not politically connected, and when a firm’s CEO is older. Furthermore, we find that only long-term foreign professional or academic experience matters, whereas short-term visiting experience does not. Finally, our results are robust after controlling for endogeneity. Therefore, this paper offers clear policy implications by suggesting that hiring more returnees as corporate directors is an efficient way to enhance firms’ CSR, which may be of particular interest to regulators in emerging markets.     

How Does Legitimacy Operate in Emerging Capital Markets? Investigating the Moderating Effects of Premium Listings and Firm Size on Risk

Drawing on an institutional theoretical perspective, we investigate the impact of the origins of organizational legitimacy on systematic risk using a sample of 358 Brazilian companies between the years 2002 and 2007. We regard three origins of legitimacy—formal–regulatory (presence in premium listings), cultural–cognitive (board of directors), and normative legitimacy (reputation)—to empirically investigate how a company's size and adherence to premium lists moderate other sources of legitimacy. Our results indicate that only under apparently better quality corporate governance conditions—presence in premium listings—do corporate reputation and the board of directors reduce systematic risk. In addition, we show that the effect of reputation on risk is positively moderated by firm size. Copyright © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Professors on the Board: Do They Contribute to Society Outside the Classroom?

According to our data, 38.5 % of S&P 1500 firms have at least one professor on their boards. Given the lack of research examining the roles and effects of academic faculty as members of boards of directors (professor–directors) on corporate outcomes, this study investigates whether firms with professor–directors are more likely to exhibit higher corporate social responsibility (CSR) performance ratings. Results indicate that firms with professor–directors do exhibit higher CSR performance ratings than those without. However, the influence of professor–directors on firm CSR performance ratings depends on their academic background—the positive association between the presence of professor–directors and firm CSR performance ratings is significant only when their academic background is specialized (e.g., science, engineering, and medicine). Finally, this positive association weakens when professor–directors hold an administrative position at their universities.     

Commitment of independent and institutional women directors to corporate social responsibility reporting

This paper examines how independent and institutional women directors on boards affect corporate social responsibility (hereafter CSR) reporting. Most of the previous empirical evidence has shown a linear association between female directors and CSR disclosure, but to the best of our knowledge, no research has investigated the individual effect of independent and institutional female directors on CSR reporting. Therefore, the analysis of how the disclosure of CSR information is affected by independent and institutional women directors in a separate way merits our attention. Thus, we posit that there is a nonlinear association, concretely quadratic, between independent and institutional female directors on boards and CSR reporting. Our results demonstrate that, in line with the monitoring hypothesis, as the presence of independent and institutional women directors on boards increases, the CSR disclosure improves, but when their presence on boards reaches a tipping point (20.47% and 13.32%, respectively), CSR reporting decreases, which is consistent with the collusion hypothesis. This research contributes to the existing literature on the relationship between board gender diversity and CSR disclosure by suggesting that board structures formed by institutional and independent female directors have an effect on CSR reporting. Hence, female directors play a relevant role on boards since they may influence the CSR disclosure.     

Compensating Outside Directors with Stock: The Impact on Non-Primary Stakeholders

Two obvious trends in corporate governance include broadening board accountability beyond shareholders’ interests and paying outside directors with equity compensation (stock and stock options). By integrating common agency and instrumental stakeholder theories, we examine the effect of stock compensation on secondary stakeholders and a firm’s participation in social issues, two areas where interests are less aligned with shareholder value. Consistent with our predictions, we found that while stock compensation may be an effective way to align directors’ goals to those of shareholders, it has adverse effects on important non-shareholder constituencies in the company’s operating environment.     

How outside directors’ human and social capital create value for corporate international investments

Grounded in theories of resource dependence, vicarious and superstitious learning, information processing, and board group literature, this study examines how outside directors’ human and social capital affect the value of corporate foreign direct investments. We employ the event study approach to examine 1210 international investment cases of 836 US firms over a 13-year period. We find significant but distinct non-linear impacts of board members’ human capital (U-shaped effect) and social capital (inverted U-shaped effect). The quality of board capital is also influential, as demonstrated by the effect of directors’ prior foreign investment performance in addition to size and degree of internationalization of interlocked companies. The performance measures of both abnormal announcement returns and operating ROA yield similar results. Our findings highlight the importance of incorporating factors related to board human and social capital for a more comprehensive analysis of the contribution of outside directors to a firm’s international success.     

Women Directors on Corporate Boards: From Tokenism to Critical Mass

Academic debate on the strategic importance of women corporate directors is widely recognized and still open. However, most corporate boards have only one woman director or a small minority of women directors. Therefore they can still be considered as tokens. This article addresses the following question: does an increased number of women corporate boards result in a build up of critical mass that substantially contributes to firm innovation? The aim is to test if ‘at least three women’ could constitute the desired critical mass by identifying different minorities of women directors (one woman, two women and at least three women). Tests are conducted on a sample of 317 Norwegian firms. The results suggest that attaining critical mass – going from one or two women (a few tokens) to at least three women (consistent minority) – makes it possible to enhance the level of firm innovation. Moreover, the results show that the relationship between the critical mass of women directors and the level of firm innovation is mediated by board strategic tasks. Implications for both theory and practice, and future research directions are discussed.     

Women and corporate boards of directors: The promise of increased, and substantive, participation in the post Sarbanes-Oxley era

Few aspects of corporate board diversity have generated the focused attention that the participation, position, and promise of women's service on the board has generated, especially in recent years. Of particular note is the extent to which women serve on large firm boards of directors (e.g., Fortune 500 firms). Increases in levels of participation have been described as glacial. While critics decry the level of participation of women on large-scale corporate boards, careful scrutiny suggests substantial progress. Concurrent with steady increases in the overall participation of women on corporate boards are increases in their presence on key board committees. Importantly, women's leadership of key board committees and their service as lead directors has improved in parallel with increases in their board memberships. These increases are particularly noteworthy in the post Sarbanes-Oxley (SOX) period. Such trends suggest the continued progress of women in assuming prominent positions in the corporate governance landscape, and provide evidence that the increasingly challenging environment in the post-SOX era has not attenuated the gains noted in the pre-SOX period.     

Erratum to: Corporate Socially Responsible Initiatives and Their Effects on Consumption of Green Products

This study extends previous literature on the association between Confucianism and corporate decisions by examining Confucianism’s influence on board gender diversity. Using a sample of Chinese listed firms during the period of 2001–2011 and geographic-proximity-based Confucianism variables, I provide strong and consistent evidence to show that Confucianism is significantly negatively associated with board gender diversity, suggesting that the proportion of women directors in the boardroom is significantly lower for firms surrounded by strong Confucianism atmosphere than for firms located in regions with weak Confucianism atmosphere. This finding also implies that Confucian philosophical system has important impacts on business ethics and women’s status in corporate governance. Moreover, GDP per capita, the proxy for economic development level in a province in which a firm is located, attenuates the negative association between Confucianism and board gender diversity. Above results are robust to different measures of Confucianism and board gender diversity and are still valid after controlling for the potential endogeneity between Confucianism and board gender diversity.     

Impact of Outsiders on Firm Performance over Different Generations of Family‐Owned SMEs

From the perspective of agency, resource‐based view, and resource‐dependence theories, we explore the impact of the presence of outside directors on firm performance in family small and medium‐sized enterprise (SMEs). Using survey data from 369 Spanish family SMEs, our findings show an inverted U‐shaped relationship between the proportion of outsiders on the boards of first‐ and second‐generation family firms and firm performance. The results show that a balanced presence of outside directors contributes to value creation in family SMEs and confirm that the composition and the roles of the board of directors differ from generation to generation in family firms.     

Democracy across Gender Diversity and Ethnicity of Middle Eastern SMEs: How Does Performance Differ?

This paper examines the relationship between boards of directors' demographic diversity and firms' financial performance. In particular, we highlight how women and ethnic minorities can affect Middle Eastern SMEs' financial performance. Using an unbalanced panel of 1,855 firm‐year observations of 371 boards of directors from nine Middle Eastern countries, our results support the positive impact of women and ethnic minority group members on Middle Eastern firms' performance. However, our evidence implies that when Western ethnic minority members increase, firms' performances tend to decrease, because these board members are appointed for regional and international board reputation legitimacy, personal business agendas, and links to the external corporate environment.     

Do Investors Value a Firm’s Commitment to Social Activities?

Previous empirical research has found mixed results for the impact of corporate social responsibility (CSR) investments on corporate financial performance (CFP). This paper contributes to the literature by exploring in a two stage investor decision-making model the relationship between a firm’s innovation effort, CSR, and financial performance. We simultaneously examine the impact of CSR on both accounting-based (financial health) and market-based (Tobin’s Q) financial performance measures. From a sample of top corporate citizens, we find that: (1) a firm’s social responsibility commitment (CSR) contributes to its financial performance; (2) after controlling for investment in innovation activities, CSR continues to have a positive impact on a firm’s financial performance; (3) the customer dimension of CSR has a positive effect on both CFP measures, whereas the employee dimension indicates a significant impact only on financial heath; and (4) the community relation dimension of CSR only affects the market-based CFP measure of firms with high innovation intensity.     

The Relationship between Corporate Social Responsibility and Firm Performance: An Application of Quantile Regression

This study empirically examines the relationship between a firm’s fulfilling of corporate social responsibility (CSR) and performance. We developed a CSR index (CSRI) to quantitatively evaluate CSR, which consists of four dimensions measuring a firm’s contributions to the economy, society, environment, and corporate governance, respectively. With data from publicly-listed firms in Taiwan during the period of 2004–2009, results of quantile regression show that fulfilling CSR has a significantly positive impact on firm performance, and that the impact in a more profitable firm tends to be significantly greater than that in a less profitable firm. Specifically, when a firm is more profitable, its management would be more willing to implement CSR. The implication is that a firm could pursue better performance while serving as a good corporate citizen.     

Firm performance and boardroom gender diversity: A quantile regression approach

We investigate the relation between firm performance and boardroom gender diversity using quantile regression methods. Using annual data on over 3000 US firms from 2007 to 2014, we show that the presence of women on the board has a positive effect on firm performance, and this effect varies at different parts of the performance distribution. Critically, we demonstrate that the presence of women directors alters the dispersion of firm performance. Our quantile regression results suggest that female directors have a significantly larger positive impact in high-performing firms relative to low-performing firms. The board gender diversity effect is not homogeneous as assumed in previous research. In addition, we account for the endogenous selection of women to the board. Using instrumental variable quantile regression, we find that in general there is a positive correlation between firm performance and board gender diversity. Overall, we suggest that boardroom gender diversity has an effect on both the conditional mean and the dispersion of firm performance, and quantile regression adds value to the empirical examination of the performance impact of board gender diversity.     

Unveiling the global focus-performance relationship in family firms: The role of the board of directors

Drawing on the resource-based view, this study examines how board composition and board tasks affect the relationship between the firm’s global focus and performance in private family firms. Based on a sample of 234 Belgian private family firms, our empirical analyses reveal that nonfamily involvement in the board attenuates the negative relationship between the firm’s global focus and performance. Furthermore, our results show that the global focus-performance link turns positive at higher levels of board networking and advisory tasks, whereas board control task has no significant effect. Ultimately, these findings underscore the board of directors as a key governance contingency, highlighting its important role in overcoming the challenges of global expansion in private family firms.     

Outside directors, board interlocks and firm performance: Empirical evidence from Colombian business groups

We investigate the relation of board structure through the appointments of outside directors and the role of busy directors on firm return on assets within an environment of no regulation for privately held firms and voluntary adoption of corporate best practices for security issuers with family controlling blockholders. This study relies on a sample of an average of 335 firms per year for the 1996-2006 period, where 244 are private firms and 285 are affiliated to one of the seven largest non-financial business groups in the country. Five of these groups were, in 2006, still family-controlled. We find a positive relation between both the ratio of outside directors, and the degree of board interlocks, with firm return-on-assets. Outside busy directors turned out to be key drivers of improved firm performance. Appointments of outsiders are endogenous to firm ownership structure. Blockholder activism as well as contestability becomes an internal mechanism that improves director monitoring and ex-post firm valuation.     

Outside directors,firm life cycle,corporate financial decisions and firm performance

We investigate whether directors with multiple outside board directorships are related to corporate financial strategy across firm life cycle stages. Using a large sample of firms from the Gulf Cooperation Council (GCC) countries, we find that when the number of directors with multiple board seats increases, firms' level of cash holdings rises, capital expenditure declines, selling, general and administrative (SG&A) expenses increase, and firm performance decreases. We further demonstrate how the relationship varies across different stages of their life cycle. Our findings have significant implications for policy makers, regulators and stockholders in GCC countries and in other emerging markets.     

Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility

This study investigates the effects of internal and external corporate governance and monitoring mechanisms on the choice of corporate social responsibility (CSR) engagement and the value of firms engaging in CSR activities. The study finds the CSR choice is positively associated with the internal and external corporate governance and monitoring mechanisms, including board leadership, board independence, institutional ownership, analyst following, and anti- takeover provisions, after controlling for various firm characteristics. After correcting for endogeneity and simultaneity issues, the results show that CSR engagement positively influences firm value measured by industry-adjusted Tobin’s q. We find that the impact of analyst following for firms that engage in CSR on firm value is strongly positive, while the board leadership, board independence, blockholders’ ownership, and institutional ownership play a relatively weaker role in enhancing firm value. Furthermore, we find that CSR activities that address internal social enhancement within the firm, such as employees diversity, firm relationship with its employees, and product quality, enhance the value of firm more than other CSR subcategories for broader external social enhancement such as community relation and environmental concerns.