Mind the gap: independent directors and corporate social responsibility in China

Jin, Ruijie; Jiang, Xiaoxian; Shen, Ao

doi:10.1108/cms-01-2021-0024

Cited by 6 publications

(6 citation statements)

References 81 publications

(213 reference statements)

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“…Furthermore, to alleviate the endogenous problems brought by the estimation model, OLS regression model with firm- and year-fixed effects estimation was used to test the relationships between green M&A premium and firm value and the moderating role of CSR strategy. The model can effectively control all factors that vary across firms but not over time and all factors that vary over time but not with the firm, which is able to significantly alleviate potential endogeneity problems (Jin et al , 2022). Columns (1)–(3) of Table 7 show the regression results after changing the model.…”

Section: Resultsmentioning

confidence: 99%

Symbolic or substantive CSR: effect of green mergers and acquisitions premium on firm value in China

Liu,

Zhou,

et al. 2023

CMS

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Purpose As the cost of completing a transaction, the green merger and acquisition (M&A) premium paid on mergers can influence whether the acquisition creates value or not. However, studies linking M&A premiums to firm value have had mixed results, even fewer studies have examined the effect of green M&A premiums on bidders’ firm value. The purpose of this paper is to investigate whether and how green M&A premiums affect firm value in the context of China’s heavy polluters. Design/methodology/approach Using 323 deals between 2008 and 2019 among China’s heavy polluters, this paper estimates with correlation analysis and multiple regression analysis. Findings Green M&A premiums are negatively associated with firm value. The results are more significant when firms adopt symbolic rather than substantive corporate social responsibility (CSR) strategies. Robustness and endogeneity tests corroborate the findings. The negative relation is stronger when acquiring firms have low governmental subsidy and environmental regulation, when firms have overconfident management, when firms are state-owned and when green M&A occurs locally or among provinces in the same region. This study also analyzes agency cost as an intermediary in the relationship between green M&A premium and firm value, which lends support to the agency-view hypothesis. Originality/value This study provides systemic evidence that green M&A premiums damage firm value through agency cost channel and the choice of CSR strategies from the perspective of acquirers. These findings enrich the literature on both the economic consequences of green M&A premiums and the determinants of firm value and provide a plausible explanation for mixed findings on the relationship between green M&A premiums and firm value.

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Section: Resultsmentioning

confidence: 99%

Symbolic or substantive CSR: effect of green mergers and acquisitions premium on firm value in China

Liu,

Zhou,

et al. 2023

CMS

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“…Although research focusing on aggregate ESG performance and its three pillars is increasing, studies of variations across individual dimensions of ESG pillars are rare (Ongsakul et al , 2020; Jin et al , 2021; Uyar et al , 2022). Variations among ESG dimensions can cause inequality when addressing different types of stakeholders, and as such, this misalignment must be assessed to avoid backlash by neglected stakeholders (Jin et al , 2021). ESG inequality arises from variations across dimensions of its three pillars – i.e.…”

Section: Introductionmentioning

confidence: 99%

“…Several recent studies concentrated on gaps/inequality/inconsistency among different dimensions of CSR. Among them, Jin et al (2021) examined whether independent directors reduce the gap between internal and external stakeholders, while Ongsakul et al (2020) found that stronger board RAF 22,3 monitoring reduces ESG inequality. Concerning the consequences of CSR inequality, Uyar et al (2022) demonstrated that ESG inequality is detrimental to social reputation, and Al-Shammari et al (2022) found that CSR inequality adversely impacts the otherwise positive connection between CSR and firm performance.…”

Section: Introductionmentioning

confidence: 99%

Over-investment and ESG inequality

Kuzey

Uyar

Karaman

2023

RAF

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Purpose This study aims to test whether over-investment is associated with environmental, social and governance (ESG) variation (i.e. inequality) across its dimensions, which, if so, would imply the prioritization of the interests of some stakeholders over those of others. Design/methodology/approach Drawing on a global sample of 29,428 observations across nine sectors and 41 countries between 2003 and 2019, the authors executed a country-industry-year fixed-effects regression analysis. In the robustness tests, this study also used the entropy balancing and propensity score matching approaches. Findings The authors found that while firm over-investment increases social pillar inequality, it reduces environmental pillar inequality. Further analysis revealed that the over-investment strategy decreases (increases) ESG inequality in low (high) environmental and social performers. This outcome could be of relevance to internal governance mechanisms and policymaking as ESG inequality might raise legitimacy concerns and hamper the long-term sustainability of firms. Practical implications The outcome of the study could be of relevance to internal governance mechanisms as well as policymaking. Considering financial constraints, firms should maintain a balanced strategy between firm investment and addressing stakeholder interests. Otherwise, over-investment might reduce environmental and social engagement in some dimensions, which could prompt criticisms and legitimacy concerns about firms and some stakeholders. Originality/value Past research has intensively focused on whether ESG – rather than ESG inequality – is associated with investment (in)efficiency. In addition, it has mostly formulated the causality running from ESG to firm investment, and hence, the literature lacks heterogeneity in this respect. Nevertheless, the authors believe that the potential effect of firm investment on ESG is of critical importance and has implications for determining whether over-investment causes variations across ESG engagement. Thus, the authors addressed this gap in the literature by investigating the relationship between over-investment and ESG inequality.

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“…Jin et al . (2021a, b) found that more independent female directors played a positive role in promoting the corporate social responsibility practices of Chinese listed companies. Post et al .…”

Section: Introductionmentioning

confidence: 99%

“…(2015) explored the relationship between female directors in UK companies' tendency to disclose GHG and found that female directors significantly increased the GHG disclosure level of UK companies compared to male directors. Moreover, similar findings regarding the relationship between female directors and corporate environmental and sustainable performance can be found in both advanced and emerging economies (Giannetti et al ., 2015; He and Jiang, 2019; Jin, Jiang and Shen, 2021; McGuinness et al ., 2017). For these reasons, we hypothesize that female directors with foreign experience may act as a conduit for corporate green commitment in emerging markets such as China.…”

Section: Introductionmentioning

confidence: 99%

Influence of independent female directors on green commitment

Wang¹,

Qi²,

Nie³

2023

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PurposeWith increasing environmental issue and problems, this study aims to explore how the female directors' foreign experience and corporate green commitment in emerging economics like China from 2008 to 2020.Design/methodology/approachThe authors draw data of all ‘A’ share listed firms listed on Shanghai and Shenzhen stock exchanges from 2008 to 2020 from the renowned Chinese database China Stock Market and Accounting Research (CSMAR). The study's data collection start from 2008, because data about green commitment are not available on CSMAR before 2008 and final year is 2020 because data about green commitment is available at the time of data collection. After dropping observations with missing data, the study's final sample contains 20,255 firm year-observations. Finally, in accordance with prior studies, the authors classified enterprises according to the “China Securities and Regulatory Commission” (2012) to categorize firms.FindingsThe authors find that female directors' foreign experience enhances the green commitment in Chinese listed companies. In additional analysis, the authors find this relationship is more pronounced when one or more foreign directors. The study's findings are robustness to different economic techniques and alternative measure of dependent variables and endogeneity concerns. Overall, the study's findings show that female directors with foreign experience transmit environmental and sustainable knowledge and practices to Chinese companies.Originality/valueFirst, the authors believe that this is the first study to analyze the impact of the overseas experience of female directors on corporate green commitment. Most previous studies have examined the influence of the presence of female directors or different attributes such as age, education and independence of female directors on board decisions, in order to protect the interests of multiple stakeholders (Elmagrhi et al., 2019; He and Jiang, 2019; McGuinness et al., 2017). This study finds that, in addition to other different attributes, the foreign experience of female directors also has a significant role in promoting corporate green commitment. By pushing corporate green commitment, these women directors leverage their experience in advanced economies abroad to add to the Chinese government's environmental and sustainability goal of achieving net zero carbon by 2060. As such, this is one of the first studies to highlight the experiences of female directors in transferring environmental and sustainability practices to Chinese companies. Second, the authors add to the literature by integrating two important board perspectives, such as gender diversity and the impact of foreign experience on corporate green commitment. Previous research has explored the presence or absence of female directors on board or foreign experience. However, this study adds to the literature by introducing important attributes of the influence of female directors' foreign experience on decision making. Third, this study provides evidence on the impact of foreign independent directors on the board. The authors document foreign independent directors enhance the relationship between female directors' foreign experience and corporate green commitment. The study's findings complement previous research by Liang and Renneboog (2017), showing that female directors with foreign experience transfer advanced levels of environmental and sustainable practice knowledge to Chinese companies.

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Mind the gap: independent directors and corporate social responsibility in China

Cited by 6 publications

References 81 publications

Symbolic or substantive CSR: effect of green mergers and acquisitions premium on firm value in China

Symbolic or substantive CSR: effect of green mergers and acquisitions premium on firm value in China

Over-investment and ESG inequality

Influence of independent female directors on green commitment

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