Carbon emissions, corporate governance, and staggered boards

Abstract

Carbon emissions have been identified as a major cause of global warming and are harmful to the environment. Given the seriousness of climate changes, businesses are encouraged to adopt corporate strategies to improve environmental performance. Staggered boards (or classified boards) are one of the controversial corporate governance devices being employed by corporations that protect managers from the market for corporate control. This paper explores whether staggered boards can be a useful business strategy to improve carbon emissions. Relying on a novel data set in which the presence of a staggered board is identified through advanced machine learning algorithms and textual analysis, we find that staggered boards bring about significantly worse emission performance by 10.67%. Our results corroborate the premise that staggered boards insulate self‐interested managers from market discipline and thus exacerbate agency problems, resulting in more unfavorable outcomes. Further analysis validates the results, that is, propensity score matching, entropy balancing, instrumental‐variable analysis, and generalized method of moments (GMM) dynamic panel data estimation. Importantly, we include firm fixed effects to account for unobserved heterogeneity. Our findings indicate that de‐staggered boards may help improve emission performance.

Staggered board, social capital and sustainability

“…Additionally, we contribute to literature on staggered boards, which have predominantly concentrated on firm value. Similar to the findings of Tanthanongsakkun, Treepongkaruna and Jiraporn (2022), who document that de‐staggered boards could improve emission performance, we find de‐staggered boards increase corporate social performance. Finally, our findings can provide insights to strengthen the United Nation's Sustainable Development Goal (UNSDG) No.…”

Does central environmental protection inspection improve corporate environmental, social, and governance performance? Evidence from China

“…Furthermore, the inner logic of CEPI and corporate ESG performance was deconstructed, thus extending the applicable boundary of agency theory. Previous research only explored the single agency problem that exists between shareholders and management or major shareholders and other shareholders (Tanthanongsakkun et al, 2022), as well as the central–local agency problem arising from the failure of local governments to keep pace with the central government in environmental governance (Child et al, 2007). The empirical findings of the present research suggest that CEPI, as an environmental policy characterized by “governance,” strengthens the incentives of local governments to govern by strengthening the supervision of local environmental policy implementation, thus alleviating the agency problem between the central government and local governments.…”

“…Taking on corporate responsibility enables firms to be supported by stakeholders in future development and to access the external resources they need to thrive (Adomako & Tran, 2022; Xie et al, 2019). Agency theory suggests that better ESG performance means that the firm has a better corporate governance mechanism that can effectively monitor and discipline management behavior and align the goals of agents and principals, thus reducing agency problems (Tanthanongsakkun et al, 2022; Yu et al, 2018). Therefore, according to stakeholder theory and agency theory, in this work, the impact of CEPI on corporate ESG performance is analyzed in terms of the corporate environment, social responsibility, and corporate governance.…”

Corporate culture, innovation and board size: recent evidence from machine learning and earnings conference calls

“…We use PSM to corroborate our findings (Rosenbaum and Rubin, 1983;Lennox et al, 2011;Ongsakul et al, 2021a;Treepongkaruna et al, 2022;Tanthanongsakkun et al, 2023;Chatjuthamard et al, 2022a). The sample is split into quartiles based on the size of the board.…”