Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis

Zubeltzu‐Jaka, Eugenio; Ortas, Eduardo; Etxeberria, Igor Álvarez

doi:10.3390/su11247121

Cited by 6 publications

(10 citation statements)

References 126 publications

(182 reference statements)

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“…Although both values are positive and significant (by not including zero in the confidence interval), supporting H1a and H1b, the impact of CSR‐oriented boards on social and environmental performance indicators is 10 times higher than the impact on financial performance indicators. These findings are consistent with prior research showing a tendency for internal governance measures to be more effective on social and environmental performance indicators than on financial ones (i.e., Byron and Post (2016) and Post and Byron (2015) for gender and Ortas et al (2017) and Zubeltzu‐Jaka et al (2019) for board independence).…”

Section: Resultssupporting

confidence: 91%

Corporate social responsibility oriented boards and triple bottom line performance: A meta‐analytic study

Zubeltzu‐Jaka,

Álvarez‐Etxeberria,

Aldaz‐Odriozola

2023

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In this article, we aim to investigate the effect of corporate social responsibility (CSR)‐oriented boards on triple bottom‐line (TBL) performance and whether internal corporate governance exhibits a facilitating role in achieving the sustainable development goals by enhancing the performance indicators of the TBL. Specifically, this article aims to shed light on this issue by meta‐analyzing the relationship between good governance and both social and financial performance, using a global sample to facilitate this analysis taking into account the incidence of the institutional characteristics of different countries and their impact on the relationship studied, by means of eight meta‐analyses. For this purpose, we conducted a meta‐analytic study on a sample of 289 articles published between 1997 and 2021. The results show that CSR‐oriented boards have a direct effect on corporate social performance (CSP) indicators and that their impact on financial outcomes is mediated by CSP strategies. Board size, gender diversity, and board independence present a facilitator profile of CSP, while only gender diversity enhances financial outcomes. The influence of CSR‐oriented boards is more acute in countries with greater protection for stakeholders and stronger environmental awareness.

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Section: Resultssupporting

confidence: 91%

Corporate social responsibility oriented boards and triple bottom line performance: A meta‐analytic study

Zubeltzu‐Jaka,

Álvarez‐Etxeberria,

Aldaz‐Odriozola

2023

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“…However, Lipton and Lorsch (1992) indicate that the benefits of increased monitoring capacities associated with large size boards outweigh any supposed deficiencies. Moreover, several studies support the argument of Lipton and Lorsch (1992) and provide evidence that board size has a positive impact on CSR performance (Endrikat et al , 2021; Zubeltzu-Jaka et al , 2019), CSR reporting (Lagasio and Cucari, 2019; Guerrero-Villegas et al , 2018; Velte, 2021b) and the quality of integrated reporting (Vitolla et al , 2020).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 70%

“…Additionally, given that accounting firms are expected to comply with definitive rules and standards established by local and global regulators, such firms are likely to provide CSRA services at much higher prices than non-accounting firms (Velte, 2021a). Accordingly, depending on to the voluntary nature of CSRA on the one hand, and the conservative essence of independent and female board directors regarding financial decisions (Sultana et al , 2015; Zubeltzu-Jaka et al , 2019), on the other hand, it seems reasonable that these directors would prefer less expensive CSRA providers. No other board attributes are found to affect the decision when it comes to choosing assurance providers.…”

Section: Robustness Testsmentioning

confidence: 99%

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Aladwey¹,

Elgharbawy²,

Ganna³

2021

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Purpose This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports. Design/methodology/approach From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis. Findings The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision. Research limitations/implications The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers. Practical implications The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms. Social implications Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure. Originality/value The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

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“…Potharla and Amirishetty (2021) report an inverted U-shape association between boardroom independence, board size, and financial performance. Zubeltzu-Jaka et al (2019) investigate the influence of boardroom independence on enterprises' financial performance through a meta-regression model. The study reports that companies with more independent boards accomplish a higher accounting performance but a lower market performance.…”

Section: Theoretical Background Literature Review and Hypothesismentioning

confidence: 99%

Nexus between boardroom independence and firm financial performance: evidence from South Asian emerging market

Khan,

Saleem,

Ud Din

et al. 2024

Humanit Soc Sci Commun

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This study empirically investigates the linkage between boardroom independence and the financial performance of non-financial firms in an emerging market featured by family-controlled businesses and concentrated ownership. The relationship is tested in a sample of 152 non-financial firms listed on the Pakistan Stock Exchange over a period from 2003 to 2018. Firms’ financial performance is measured through return on assets (ROA), return on equity (ROE), market-to-book ratio (MBR), and Tobin’s Q (TQ), while boardroom independence is measured through the proportion of non-executive directors on the corporate board. Using the dynamic GMM approach to address the possibility of endogeneity, it was found that boardroom independence is significantly negatively related to the financial performance of the sample firms. This negative impact is due to the reason of close ties of outside independent directors (non-executive directors) with dominant shareholders and management in personal, financial, and social terms. A significant negative influence of the board size and CEO duality on firms’ financial performance was also observed. The present study will add to the existing literature on corporate governance and firm financial performance using firm-level manually collected data. Further, our findings will also help the policymakers by providing empirical insights for strengthening corporate governance mechanisms in emerging market economies, specifically in the context of Pakistan.

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Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis

Cited by 6 publications

References 126 publications

Corporate social responsibility oriented boards and triple bottom line performance: A meta‐analytic study

Corporate social responsibility oriented boards and triple bottom line performance: A meta‐analytic study

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Nexus between boardroom independence and firm financial performance: evidence from South Asian emerging market

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