The impact of sustainability (environmental,social, and governance) disclosure and board diversity on firm value: The moderating role of industry sensitivity

Using a large panel data set comprising 812 listed European firms, this study investigates whether sustainability disclosure (environmental, social, and governance) and female representation on boards affect firm value. We observe a positive impact of sustainability disclosure and board gender diversity on firm value, suggesting that the best management practices, enhanced stakeholder trust, and female representation on boards improve firm value. We observe that the firms in sensitive industries achieve superior social and governance performance. We also observe that the firms with higher female representation on their boards present significantly superior environmental, social, and governance performance. Our results are robust to different firm and country specific control variables and to year‐ and country‐fixed effects.     

Gender diversity and firm performance: evidence from Dutch and Danish boardrooms

Drawing on the business case for gender diversity, this article examines whether board gender diversity has a positive effect on firm performance, based on evidence from the Netherlands and Denmark. We use empirical data on 186 listed firms observed in 2007. Almost 40% have at least one woman in the boardroom. Within boards, the average share of women is only 5.4%. To investigate the impact of board gender diversity, two-stage least-squares estimation is applied, using Tobin’s Q as a measure of performance. Our findings indicate that on the basis of this data-set, there is no relation between board diversity and firm performance.     

Board gender diversity and environmental,social, and economic value creation: Does family ownership matter?

Prior literature on firm value creation for stakeholders has oversimplified and narrowed the concept of value down to “economic returns.” Although economic returns are fundamental to a firm's core stakeholders (i.e., shareholders), other legitimate stakeholders want “value” beyond economic returns. We define stakeholder value as the financial and nonfinancial returns a firm can offer to its legitimate stakeholders, and empirically investigate whether board gender diversity (BGD) improves our multidimensional measure of value. Using Thomson Reuters' ASSET4 data for U.K.‐listed firms available from Eikon for the period 2007–2017, we report a significant positive relationship between BGD and stakeholder value creation. In particular, BGD increases social and environmental value creation in addition to economic returns. Furthermore, our results suggest that even though gender‐diverse boards are associated with stakeholder value creation in family firms, this is only conspicuous for environmental value creation. The findings suggest that although female directors cater to the interests of broader stakeholder groups, family ownership causes them to mainly focus on environmental stakeholders. The study provides important implications for regulators, stakeholders, and academic scholars.     

Entrepreneurial orientation and firm performance in family SMEs: the moderating effects of family,women, and strategic involvement in the board of directors

Entrepreneurial success in family SMEs is largely determined by the knowledge, skills, and new ideas contributed by board directors, the most important actors in the formulation of corporate strategy and decision making. The composition of family SME boards has traditionally been homogeneous, as such boards usually comprise male family members. Boards’ contributions, however, depend on their level of diversity and strategic involvement. This study analyzes the moderating effects of two main sources of board diversity in family firms, family involvement level and gender diversity, as potential means of enhancing family firms’ success when exploiting entrepreneurial initiatives. This study also explores whether these two potential moderators depend on the strategic involvement of the board directors. Based on a sample of 230 Spanish family firms, we found that the link between entrepreneurial orientation and performance is stronger in firms with lower levels of family involvement and higher levels of gender diversity in the board. Moreover, the board’s high strategic involvement may strengthen the positive impact of gender diversity and change the moderating influence of family involvement from negative to positive.     

Gender and management on Spanish SMEs: an empirical analysis

Few studies have investigated the presence of women on the boards of directors of companies. Those that have been done have focused on large firms. In this study we analyzed the gender diversity of a sample of Spanish small and medium enterprises. These firms are of great importance in terms of their number, the employment they provide, and their sales. Furthermore, there is an open debate in Spain about gender equality after the passing of several laws against gender discrimination. We found that women's presence on boards generates a negative impact on firm performance and this result may be due to less risky strategies implemented by women directors. This finding is interesting because it sheds light on how women can affect the functioning of a board. We also found that family firms and firms with a financial institution as the main shareholder tend to have more women on the board. Finally, we show that firms with less debt, more assets, and larger boards have more women as directors.     

The effects of an environmental accountability system on local environmental governance and firms’ emissions

The Chinese central government introduced the environmental accountability system (EAS) policy in 2006 to encourage local governments to execute environmental policies appropriately. However, the effects of this EAS policy have not been investigated at the firm level. In this study, we first measured the environmental governance intensity of local governments by calculating the environment word portion (EWP) of the annual governments’ work reports and found that local governments increased their efforts after the EAS policy implementation. We then constructed a continuous difference-in-difference (DID) strategy to estimate the effect of the EAS on firms’ emission and found that firms significantly reduced their sulphur dioxide (SO₂) emission under the regulation intensity of local governments after the EAS policy. The reductions are mainly because of the private, non-export, labour- and capital-intensive firms. The EAS policy may encourage firms to reduce coal usage, design more products, decrease capacity investment and even withdraw from the market, thus reducing pollutant emission. Finally, we tested firms’ response in various polluting sectors and found that the EAS policy may cause local governments to fail in distinguishing low pollution sectors from high pollution sectors.     

Demographic Diversity in the Boardroom: Mediators of the Board Diversity–Firm Performance Relationship

Whereas the majority of research on board diversity explores the direct relationship between racial and gender diversity and firm performance, this paper investigates mediators that explain how board diversity is related to firm performance. Grounded in signalling theory and the behavioural theory of the firm, we suggest that this relationship operates through two mediators: firm reputation and innovation. In a sample of Fortune 500 firms, we find a positive relationship between board racial diversity and both firm reputation and innovation. We find that reputation and innovation both partially mediate the relationship between board racial diversity and firm performance. In addition, we find a positive relationship between board gender diversity and innovation.     

Exploring the effect of gender diversity in MFIs during turbulent periods

Abstract

Gender diversity is generally recognized as relevant in microfinance, and the relationship between gender diversity and firms’ performance has received attention in academic literature. The above-mentioned relationship has not been addressed until now in the microfinance industry specifically. This study seeks to explain the role played by gender diversity in the workforce of microfinance institutions (MFIs) during turbulent periods in the firms’ performance. The study analyses data from 555 ratings of 185 MFIs from MicroFinanza Rating, a leading microfinance rating agency. The analysis shows that the number of women on the staff of MFIs is significantly and positively associated with both the Return on Equity and Operational Self-Sufficiency of MFIs, indicating a positive impact of gender diversity on firms’ performance.     

城市可持续发展和企业的环境行为——对昆明市企业环境行为的分析

本文考察了昆明市环保局重点监控的污染企业的环境行为,发现昆明市国有企业比其他企业在环境保护方面的投资更多,而外资企业和私营企业在环境保护行为与其属性没有显著关系.另外,总体上,企业经营时间与其环境保护行为也不存在显著关系.但是,对化学原料及化学制品制造业企业的研究表明,企业经营时间越长,其环境保护的投入水平更高.最后,尽管滇池流域的治理受到广泛关注,但是企业是否处于流域之内与企业本身对环境保护的投入方面并没有显著的关系.最后,本文提出了一些加强对企业环境监管的政策建议.     

Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation

This paper aims to construct a comprehensive corporate environmental responsibility (CER) engagement measurement to examine the relationship between CER engagement and firm value as well as explore the mediating effect of corporate innovation on this relationship based on a sample of 496 China's A‐share listed companies from 2008 to 2016. The results show that when firms start to adopt environmental regulations, CER would have a negative effect on firm value; however, at a specific level, CER would start to enhance firm value positively. In addition to this, corporate innovation plays a mediating role in the relationship between CER and firm value. Corporate innovation promotes firm value of firms with CER more than firms without CER. Overall, the findings of this paper are extremely relevant for the government, investors, and firm's managers and can be utilized for policy and investment decision making. Also, the findings encourage firms to enhance their sense of environmental responsibility in order to enhance their competitive advantages, enhance corporate innovation capabilities, and thus enhance firm value.     

Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures

While prior work has investigated the impact of (a) ownership structure and (b) board gender diversity separately on corporate environmental performance, researchers have not studied the potentially important relationship between ownership control and female board diversity in influencing corporate environmental performance jointly. We do so in the context of majority ownership in family‐controlled and dual‐class firms whose motives and influence are theoretically different from that of the firm's minority shareholders. Drawing on resource dependency, socioemotional wealth theory, and secondary agency theory, we hypothesize that majority family owners and dual‐class owners likely choose women directors to help advance their personal preferences for environmental corporate social responsibility. Our empirical tests utilizing 2,755 U.S. firm years over the 2010–2015 show that, as hypothesized, these two majority ownership types interact with board gender diversity to positively influence corporate environmental performance.     

Do external diversity practices boost focal firm performance? The case of supplier diversity

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.     

Board interlocks and greenhouse gas emissions

Using resource dependence theory, we analyze board interlocks, their industry origin, and their relationship to firms' greenhouse gas (GHG) emissions. Interlocks create connections by having board members from one firm sit on other firms' boards, providing an avenue for sharing information and resources to aid in knowledge transfer and capability development. As firms face challenges for improved GHG emissions performance, they may look to their board members' connections to other firms to acquire needed resources. Using a sample of US Standard & Poor's (S&P) 1500 firms for years 2009 to 2018, we find that firms with a greater number of board interlocks achieve lower GHG emissions intensity. We also find that boards for the best performing companies have interlocks in the same industry, in other industries, and with firms leading in GHG emissions intensity, especially for firms in higher environmentally impacting industries, as they face greater emissions challenges.     

Gender diversity,gender norms and firm performance: Evidence from India

This paper examines the effect of gender diversity on the financial performance of firms in India. Specifically, we examine two specific aspects of gender diversity- how the implementation of gender diversity across various workforce levels affects firm performance and the role of gender norms and culture in the external environment where the firm operates in influencing the relation. Using the World Bank Enterprise Survey, 2014, we use propensity score matching and instrumental variable estimation techniques to test the effect of gender diversity on firm performance. The results suggest that better women’s representation at higher levels of the workforce is associated with better performance. In contrast, women’s representation at the worker level of the workforce does not affect performance. Additionally, the state-level gender empowerment norms strongly condition the effect of gender diversity on performance. In states with better gender empowerment indicators, firms with better female representation at all levels of permanent employment also have better performance. In contrast, there is no effect of gender diversity on performance in states with worse women empowerment indicators.     

Who Appoints Them,What Do They Do? Evidence on Outside Directors from Japan

Although reformers often claim Japanese firms appoint inefficiently few outside directors, the logic of market competition suggests otherwise. Given the competitive product, service, and capital markets in Japan, the firms that survive should disproportionately be firms that tend to appoint boards approaching their firm‐specifically optimal structure. The resulting debate thus suggests a test: do firms with more outsiders do better? If Japanese firms do maintain suboptimal numbers of outsiders, then those with more outsiders should outperform those with fewer; if market constraints instead drive them toward their firm‐specific optimum, then firm characteristics may determine board structure, but firm performance should show no observable relation to that structure. We explore the issue with data on the 1000 largest exchange‐listed Japanese firms from 1986 to 1994. We first ask which firms tend to appoint which outsiders to their boards. We find the appointments decidedly nonrandom. Firms appoint directors from the banking industry when they borrow heavily, when they have fewer mortgageable assets, or when they are themselves in the service and finance industry. They appoint retired government bureaucrats when they are in construction and sell a large fraction of their output to government agencies, and they appoint other retired business executives when they have a dominant parent corporation or when they are in the construction industry and sell heavily to the private sector. Coupling OLS regressions with two‐stage estimates on a subset of the data, we then ask whether the firms with more outside directors outperform those with fewer, and find that they do not. Instead, the regressions suggest—exactly as the logic of market competition predicts—that firms choose boards appropriate to them.     

Age diversity and firm performance in an emerging economy: Implications for cross‐cultural human resource management

This study tests the effect of age diversity on firm performance among international firms. Based on the resource‐based view of the firm, it argues that age diversity among employees will influence firm performance. Moreover, it argues that two contextual variables—a firm's level of market diversification and its country of origin—influence the relationship between age diversity and firm performance. By testing relevant hypotheses in a major emerging economy, that is, the People's Republic of China, this study finds a significant and positive effect of age diversity and a significant interactive effect between age diversity and firm strategy on profitability. We also find a significant relationship between age diversity and firm profitability for firms from Western societies, but not for firms from East Asian societies. The paper concludes by discussing the implications of this study's findings. © 2011 Wiley Periodicals, Inc.     

Do Women Leaders Promote Sustainability? Analyzing the Effect of Corporate Governance Composition on Environmental Performance

In this study, we investigate the impact women leaders have on the corporate environmental strategies of organizations. Using a dataset of all Fortune 500 CEOs and boards of directors for a ten‐year period, we examine several aspects of gender in leadership on environmental strategy. Specifically, we test the impact of women CEOs, the proportion of women on the BOD, the number of interlinks women board members hold, and the interactive and cumulative effects of women CEOs and gender diverse boards. Findings suggest that firms characterized by gender diverse leadership teams are more effective than other firms at pursuing environmentally friendly strategies. This study contributes to research on corporate governance and environmental performance by showing how the gender composition of leaders affects corporate practice. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

The impact of racial and gender diversity in management on financial performance: how participative strategy making features can unleash a diversity advantage

How does racial and gender diversity in the management ranks affect the bottom line? Our findings indicate that participative strategy making (PSM) positively moderates the relationship between both racial and gender diversity in management and firm performance measured as return on assets. Specifically, PSM strengthens the positive relationship that exists between racial diversity in management and firm performance. Although no main effect is observed for gender diversity in management, our results reveal that gender diversity in management is positively related to performance when PSM is high. However, we find that gender diversity in management is negatively related to performance when PSM is low, while gender homogeneous management experience superior performance. We offer implications for diversity research to embrace and consider the role of PSM and ‘inclusiveness’.     

Environmental Policies and Firm Value

Many organizations are currently becoming more environmentally friendly. Eco‐efficiency maximizes the effectiveness of a business operation while reducing its impact on the environment; with the necessary skills, organizations can create more value while using less input. Prior empirical studies have suggested that firms engaging in eco‐efficient activities are better valued than those without such activities. Therefore, this will enhance business efficiency and excellence. This study investigates the link between eco‐efficiency, as environmental policy, and firm value in the United Kingdom (UK) for the period 1999 to 2008. We generate new insights into environmental–financial performance by using different definitions of the term ‘eco‐efficiency’. In the UK context our results support that eco‐efficient firms have higher market values than those lacking environmental strategies. Hence, we recommend that firms become involved in environmental polices since the adoption of these polices will have a positive impact on firm value. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.     

Nudging toward diversity in the boardroom: A systematic literature review of board diversity of financial institutions

Going beyond the mere gender diversity in the boardroom, this systematic review comprehensively covers the research on board diversity of financial institutions. More specifically, we cover gender diversity, as well as other characteristics of diversity, such as nationality, age, tenure, experience, education, ethnicity, and religion. A systematic literature review was employed using Scopus and Web of Science databases, covering all publications until May 2020, which resulted in 91 studies from 66 top-ranked journals in accounting, finance, and economic fields. We analyze them based on the journal, methodology, research construct questions, and theoretical perspectives. Our results highlight the substantial knowledge gaps and the inconsistent findings of prior studies on several aspects of the field, suggesting avenues for further studies in terms of research designs, settings, scope, and theories. We argue that there is a need to explore other board diversity attributes rather than focusing on the gender diversity of the boards of financial institutions to achieve sustainable development. Also, more work is outlined on topics related to board diversity of financial firms that receive limited attention from scholars, such as (but not limited to) environmental performance, capital structure, intellectual capital, innovation and earnings quality of financial institutions, as well as the indirect effect of policy settings.