This paper contributes to the extant business strategy and sustainable development literature by investigating the effect of a broad corporate governance disclosure index on executive compensation and, subsequently, determines the extent to which the pay‐for‐sustainability sensitivity is moderated by corporate governance mechanisms. Employing data collected from 16 Sub‐Saharan Africa countries over the period from 2007 to 2018, the findings are as follows: First, we report that better‐governed banks pay lower compensation packages to their executives. Second, we find that executive compensation increases sustainable banking disclosures in the countries. Third, the findings show that executive compensation is negatively associated with environmental performance. Finally, we detect that the association between executive pay and sustainable banking performance is significantly moderated by corporate governance mechanisms, revealing that the pay‐for‐sustainability sensitivity is mainly positive and improves in banks with high corporate governance quality. This implies that the pay‐for‐sustainability sensitivity is contingent on the quality of the bank's internal governance mechanisms. Our findings have key implications for banking practitioners, regulators, environmental activists, and policy‐makers.

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Purpose The purpose of this paper is to investigate the effect of family ownership on investment-cash flow sensitivity and on firm performance. Design/methodology/approach The author uses panel data to examine the relationship between investment and cash flow and between family ownership and the firm performance of Thai listed firms from 2001 to 2008. To account for the endogeneity of the lagged dependent variable, the investment equation is estimated by the generalized method of moments, following Arellano and Bond (1991). Findings The presence of family owners reduces the sensitivity of investment and cash flow. At low and high levels of family ownership, an increase in family shareholding leads to lower investment-cash flow sensitivity. In contrast, firms with medium family ownership levels have higher investment-cash flow sensitivity. Only at high levels of family ownership is firm performance positively related to family shareholding. Originality/value The ownership levels of family shareholders affect the investment-cash flow sensitivity in an S-shaped relation, supporting the interest alignment and entrenchment effects. When family shareholders have high ownership incentives, their interest alignment reduces the agency costs of free cash flow problems and leads to higher firm performance.

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