Addressing a gap in the literature, the analysis explores how ESG score relate to systematic risk over time, with particular attention to the Environmental, Social, and Governance components, which have received limited attention to date. Therefore, this study examines whether the relationship between ESG score and systematic risk has evolved over time in the broader context of the transition toward a sustainability-oriented economy, employing a market model based on the Capital Asset Pricing Model (CAPM) framework developed by Sharpe. Using a panel dataset of financial and non-financial firms included in the STOXX Europe 600 Index between 1 January 2008 and 31 December 2022, we present empirical evidence of a decline in systematic risk following the adoption of the United Nations’ 2030 Agenda in September 2015. This reduction is more pronounced among companies with higher ESG scores. Similar patterns are observed across the individual E, S, and G dimensions. The implications of these findings are twofold. Theoretically, they reinforce the expanding literature suggesting a negative correlation between ESG performance and systematic risk. Practically, they offer relevant insights for policymakers and regulators, highlighting the value of integrating ESG considerations into risk assessment, monitoring, and management frameworks to support more effective systemic risk mitigation strategies. This study contributes to the body of research analysing the relationship between ESG factors and systematic risk, which is currently not fully explored and with conflicting results. Extending previous studies, we investigate the effect of overall ESG scores together with their distinct components (E, S, and G).
In parallel with the growing emphasis on corporate social responsibility (CSR), management scholars have increasingly explored the factors that drive CSR engagement. While most previous research has concentrated on institutional and organizational drivers in developed economies, this study aims to broaden our knowledge by examining whether individual factors, i.e., CEOs’ characteristics, can directly or indirectly promote CSR engagement in emerging economies. Specifically, based on agency theory, we argue that dominant-owner CEOs will have a negative influence on CSR engagement, and based on the upper echelons theory, we argue that dominant-owner CEOs’ expertise and education may influence CSR engagement in emerging economies. We tested our hypotheses using a longitudinal sample of the 500 largest Indian firms listed on the Bombay Stock Exchange (BSE) between 2015 and 2019. Our results support our theoretical predictions and make three key contributions to the literature: (i) deepen our understanding of individual drivers of CSR in emerging economies, (ii) advances agency theory by showing the negative impact of dominant-owner CEOs on CSR engagement, and (iii) extends the upper echelons theory by highlighting the moderating role of CEOs’ financial expertise and education on the baseline relationship.
The language CEOs use in their communications, i.e., CEO-speak, is a complex phenomenon, likely to be influenced by the need to provide information and the strategic intention of managing the impressions of the firm’s audience. This work is the first to specifically address CEO-speak regarding firms’ commitment to SDGs. It investigates whether and how sustainability performance and national culture influence such disclosure. Drawing on legitimacy theory and employing a Poisson regression, we examine the content of 443 CEO-signed texts of European listed firms. The results indicate that sustainability performance and certain Hofstede’s cultural dimensions influence SDG-related sentences within CEO-speak. These are more prevalent in sustainable firms situated in countries characterised by effective management of social inequalities, a tendency to avoid unknown or ambiguous situations, a strong focus on future prospects, and a high restriction on human duties. Our work shows that CEOs express their commitment to sustainable development, aligning with stakeholders’ values while converging with firms’ performance.
The corporate political activity literature suggests that business executives’ personal service in government creates bureaucratic capital which can be deployed in ways that favour private firms. We investigate whether there are firm-specific benefits for UK companies with executives simultaneously serving as non-executive directors (NEDs) on the corporate governance boards responsible for the oversight of UK government agencies. We also explore whether these benefits are greater for firms that have “insider” status – FTSE100 companies. To estimate potential firm-specific benefits from executives’ service on government boards, we employ a novel database of the NEDs sitting on the departmental and agency boards in UK central government for the period 2008-21. Information on these NEDs is supplemented with data on market and financial performance, and tax liabilities for a large sample of UK-registered companies. Our statistical results indicate that firms with executives simultaneously serving as NEDs on government boards have higher market capitalization, higher turnover and lower taxation. Further analysis indicates that the benefits of executive board service in government are particularly strong for FTSE100 companies, but that for these companies such service may be associated with weaker profitability.
The nonprofit organizational studies have extensively examined the factors influencing commitment in the formal governance. However, there has been limited exploration of the mechanisms facilitating inclusion within the day-to-day management of such organizations, particularly with regards to the most vulnerable individuals. This article endeavors to address this research gap by investigating these mechanisms within a specific nonprofit organization, namely the Accorderies, which has prioritized inclusion as a fundamental aspect of its associative project. The role of day-to-day management in inclusion and diversity is rarely considered, even though governance combines formal and informal aspects. However, given the debates on diversity in management, this day-to-day management could shed new light on the inclusion process. For practitioners, it could be a valuable lever for overcoming certain pitfalls linked with the process of inclusion in governance. Our analysis adopts a mixed-method research approach, employing a combination of quantitative and qualitative analyses, involving focus group discussions conducted with six distinct autonomous Accorderies. The findings of our analysis reveal how: (1) diversity can serve as a catalyst for promoting inclusion, and fostering a sense of belonging and recognition of uniqueness of all each individual, and (2) the exchanges and rules that underpin this nonprofit organization encourage people to be committed. These empirical findings lead us to emphasize the benefits of day-to-day management as a lever for inclusion of the most vulnerable, based on specific institutional rules and resources.
This study investigates the influence of former government employees transitioning to boardroom positions on the disclosure of environmental, social, and governance (ESG) factors, both individually and collectively, within private companies. The study sample included 81 non-financial companies listed on the Amman Stock Exchange from 2012 to 2021, and the data was collected manually from publicly available annual reports. The main findings uncover compelling insights, which showed a significant positive association between former government employees on corporate boards and enhanced disclosure within the environmental, social, and overall ESG dimensions. However, the relationship with governance disclosure remains weak and statistically non-significant, indicating that this area is still a topic of ongoing discussion and debate, particularly regarding the extent to which former government employees can influence governance practices. This discovery underscores the significant influence of these individuals in fostering responsible corporate behavior, aligning with the theoretical underpinnings of corporate governance and sustainability theories. Imprint theory suggests that historical experiences shape long-term corporate behavior, and stakeholder theory emphasizes the importance of considering the interests of diverse stakeholders. This study’s contribution lies in shedding light on this interplay and providing valuable insights for stakeholders such as policymakers, investors, corporate leaders, shareholders, and communities. Policymakers can leverage these findings to encourage the integration of government expertise into corporate governance structures, fostering sustainable and ethical practices. Corporate leaders can diversify their boards by appointing government-experienced individuals to enhance governance and sustainability. This study constitutes one of the pioneering investigations into the relationship between government-to-boardroom transitions and ESG disclosure within companies.
This study investigates whether sell-side analysts incorporate business strategy considerations into their stock recommendations and examines the moderating role of corporate governance in this relationship. Utilizing a dataset from Capital IQ S&P and BoardEX covering UK firms from 2007 to 2018, we employ multiple regression methodologies to demonstrate that firms with well-defined business strategies (e.g., prospector vs. defender orientations) receive systematically more favorable analyst recommendations. Our findings further reveal that robust corporate governance mechanisms amplify the positive association between strategic positioning and analyst sentiment. These results suggest that analysts value strategic clarity alongside governance quality when formulating recommendations, offering practical insights for firms seeking to optimize their market positioning and for investors integrating analyst research into decision-making frameworks.
This study examines the impact of board members' educational levels on environmental, social, and governance (ESG) disclosure, drawing on cognitive diversity theory, resource dependence theory, and upper echelons theory. Using a panel dataset of 810 firm-year observations from Jordanian non-financial companies listed on the Amman Stock Exchange between 2012 and 2021, the study investigates how varying levels of educational attainment (high school, diploma, bachelor's, master's, and Ph.D. degrees) affect ESG reporting practices. The findings reveal that board members with bachelor's degrees consistently and positively influence all ESG dimensions. This can be interpreted through the lens of cognitive diversity and resource dependence theories, as bachelor's degree holders often bring well-rounded, applied business knowledge that aligns with the strategic and operational nature of ESG implementation. Their balanced educational background, combined with full commitment to their corporate responsibilities, enables them to contribute meaningfully to ESG oversight and leverage relevant networks and external resources. In contrast, board members with high school or diploma qualifications show limited influence on ESG disclosure, while those with master's and Ph.D. degrees exhibit mixed or non-significant effects. Drawing on upper echelons theory, this may reflect a divergence between their academic orientation and the practical demands of board governance. Advanced degree holders, while highly knowledgeable, may be more engaged in research or academic roles, which can reduce their availability or focus on firm-level ESG strategy. These findings suggest that not all educational diversity equally enhances governance outcomes; rather, the effectiveness of educational backgrounds depends on how well they align with the board's strategic responsibilities and engagement. The study offers practical implications for regulators, firms, and policymakers, emphasizing the need for educationally diverse yet operationally committed boards to advance ESG practices. While focused on Jordan, the findings contribute to broader debates on board composition and sustainable corporate governance.
This study examines the relationship between sustainability reporting and firm value, financial performance, and risk among Vietnamese firms, utilising the Global Reporting Initiative (GRI) standards. By analysing sustainability disclosures from the 100 largest firms by market capitalisation listed on the Hanoi and Ho Chi Minh stock exchanges as of 31 December 2023, the research employs multiple regression models to investigate the influence of sustainability disclosure on firm value (Tobin's Q), firm performance (ROA and ROE), and risk (Z-Score) during the 2021-2023 period. The findings reveal a relatively low level of sustainability disclosures among Vietnamese firms. Nevertheless, the study establishes a positive relationship between sustainability disclosure and both firm value and financial performance, alongside a negative relationship with firm risk. These results support the hypotheses and underscore the importance of sustainability disclosures in shaping corporate outcomes. As the first comprehensive analysis of the impact of sustainability disclosure in Vietnam using GRI standards, this research provides valuable insights for corporate managers and policymakers. It highlights the strategic importance of integrating sustainability disclosures into corporate practices to enhance firm value, improve financial performance, and mitigate risks, particularly during periods of financial uncertainty. For corporate finance managers, these findings emphasise the necessity of prioritising sustainability reporting to align with investor expectations and achieve long-term stability. Furthermore, the study stresses the broader societal implications of enhanced transparency in sustainability practices. By fostering more resilient economies in emerging markets like Vietnam, policymakers can utilise sustainability disclosures to encourage sustainable business operations, ultimately promoting improved social and environmental outcomes.
A particularly controversial corporate governance practice is the case of former CEOs who decide - and are allowed - to extend their influence by remaining as chairs of the supervisory board (in this study referred to as CACs: CEOs as Chairs). We analyze the effects and preconditions of CACs and confirm a formerly observed pattern that departing CEOs who remain as board chairs restrict their successors' potential to initiate changes. However, inhibited change is intended and will continue even after the CAC has finally left the scene, i.e., passing the baton or the ultimate departure of the CAC becomes actually a 'non-event'. In a German context, this commitment to the status quo is essentially good news: By analyzing German HDAX firms over a period of twenty years, we find empirical support that it is mainly CEOs effectively meeting the expectations of two powerful stakeholder groups (namely, shareholders and employees) who get the chance to continue as board chairs and that this practice pays off for both stakeholder groups in the long run. Consequently, the installation of a CAC is not necessarily a symptom of a missed opportunity for strategic realignment, but can rather be an indicator of a firm's sustainable development.
Second-party opinions (SPOs) are the most common type of external review for green, social, sustainable, and sustainability-linked (GSS +) bonds. Yet, there is a dearth of research on SPO providers and how they perform their role as information intermediaries. From a practical standpoint, understanding more about SPO providers is vital since they aim to reduce information asymmetry between issuers and investors. Their work enhances transparency and supports the growth of GSS + bonds, key instruments for the transition to greater sustainability. Drawing from interviews with six European SPO providers and other industry participants, this study reveals the main challenges that SPO providers face: multiple layers of information asymmetries (between the issuer and SPO and within the issuer itself), alignment of issuer and SPO provider goals, and compliance with standards and regulations. The study also shows how SPO providers attempt to overcome these challenges through policies, assets, and governance of their business models. We discuss contributions for theory and practice.
This study examines the moderating role of female directorship in the corporate boardroom in the relationship between firm performance and Chief Executive Officer (CEO) compensation for Bangladeshi financial institutions from 2016–2022. Ordinary least squares regression models were employed to evaluate the relationship. We find a significant positive correlation between firm performance and CEO compensation, specifically in relation to accounting performance. Female directorship strengthens the CEO pay-performance link in both accounting and market-based measures of performance. These results are robust to a battery of tests, including alternative measures of female board presence and firm performance, and address endogeneity issues using a lagged model and entropy balancing technique. We also find that women are more effective in setting CEO pay-performance linkage in cases of concentrated ownership, and when their presence goes beyond tokenism. Investors and policymaker should prioritize the inclusion of women on corporate boards to improve the firm's financial performance. This study contributes to the expanding body of research on board gender diversity in developing economies by examining the impact of women directors on firm performance and CEO pay, and their influence on the effectiveness of board oversight.
This study provides new empirical evidence on the relationship between integrated thinking (IT) and integrated reporting (IR). It contributes to the chicken–egg debate between IT and IR by answering the question ‘what comes first?’ and examines the determinants of IT and IR for a sample of European listed companies. The findings from both the empirical analysis and interviews with IR preparers show that IT leads to IR, and vice versa, thus creating a virtuous circle where the decision to publish an integrated report favours an inclusive decision-making process, as well as embracing the IT journey favours the adoption of IR. These results could drive companies’ internal choices and policymakers’ initiatives aimed at progressing an integrated organisational culture by identifying the differential drivers of IR and IT and suggest that companies’ journey towards integration can start either from the integrated report (IR develops IT) or from developing an IT culture that creates a fertile background for IR (IT leads to IR).
This paper examines the corporate governance mechanisms in the banking industry, and more specifically, the interplay between ownership concentration and market competition, and their collective impact on bank risk and performance. Unlike previous studies, we addressed the question of whether the ownership structure and market competition are substitutes or complements in the developing context of the Middle East and North Africa (MENA) region. We utilize a panel dataset and adopt panel data econometric techniques such as fixed/random effects and the Generalized Method of Moments (GMM) estimator. The results of our analysis indicate that both ownership concentration and market power of banks are associated with enhanced profitability and risk. Furthermore, the complementarity effect of ownership concentration and market competition suggests that market competition seems to reinforce the impact of ownership concentration on bank profitability and risk. This effect is consistent across banks with varying levels of concentrated ownership and is more pronounced for Islamic banking institutions. The insights derived from our study offer valuable guidance to regulatory institutions and policymakers in the MENA region helping them to formulate competition policies specifically designed to increase the financial stability of banks with controlling shareholders.
As the private standard setter taking charge of the international accounting standard-setting, the importance of the International Accounting Standards Board's (IASB) legitimacy has been recognized, particularly in the European Parliament, policy papers, and academic literature. However, despite the crucial role of Mark C. Suchman's, 1995 article in the research of private accounting standard setters' legitimacy, few studies have reviewed the IASB's legitimacy based on Suchman's framework. Moreover, there exists a limited understanding of cognitive legitimacy and a misinterpretation of the various types of legitimacy in studies of IASB legitimacy. With the aims to improve the understanding of IASB legitimacy, especially cognitive legitimacy, this study conducts a systematic review of existing research on this subject (32 articles and 5 books) through the lens of Suchman's theoretical framework. Our review reveals that most empirical research emphasizes due process and examines different forms of legitimacy in isolation. Furthermore, previous studies often focus on the IASB's initial establishment, neglecting the impact of evolving institutional dynamics. Building on these observations, this study calls for enhancing construct clarity by analyzing the interaction between different forms of legitimacy, expanding the understanding of cognitive legitimacy through in-depth comparative and historical studies, and investigating the influence of institutional changes. By grounding this analysis in Suchman's legitimacy theory, this study not only broadens the scope of inquiry into the IASB's legitimacy but also provides valuable insights for the IASB and other transnational organizations in navigating complex and evolving environments.
Corporate social responsibility (CSR) disclosures and a firm's CSR reputation are important bases for retail investors' judgments of legitimacy and their investment decisions. The present experimental vignette study with 300 participants acting as retail investors aims to provide deeper insights into the structure of these judgment processes. Our structural equation model reveals that a favorable CSR reputation and an assurance of the CSR disclosures positively affect whether values-driven motives are attributed to a firm's CSR efforts, the perceived credibility of its CSR disclosures, and perceptions of its corporate social performance (CSP). In turn, perceptions of a firm's CSP reinforces investors' intention to invest, which in the end positively influences the amount of their investment. Our findings disentangle the complex cognitive processes involved, thus contributing to a better understanding of the combined effects of a firm's CSR reputation and CSR disclosures on investors' decision-making. In particular, these findings add to the scarce empirical research on individual legitimacy in investor decision-making and highlight the relevance of CSP as a decision parameter for investors, separate from corporate financial performance (CFP). Finally, the empirical results provide levers for managers to gain support from their firm's investors and offer guidance for standard-setters and regulators regarding new disclosure requirements.
This paper addresses a gap in the management accounting literature by examining the relationship between innovation, contract completeness, and the use of management controls in buyer–supplier relationships. Early evidence shows that uncertainty significantly affects contracts and controls, reducing both contract completeness and the inclusion of control specifications in contracts. However, little is known about the role of innovation in shaping inter-organisational relationships. Our study leverages survey evidence collected in the fashion industry, where innovation is both a source of competitive advantage and an intrinsic feature of the production process. Results indicate that process innovation has a negative relationship with contract completeness and reduces the formalisation of controls in contracts, while product innovation has no significant association. This study highlights the importance of designing contracts that balance completeness and flexibility in innovation activities, and the crucial role that trust plays, as a substitute for contractual control mechanisms, in improving buyer–supplier relationships.
