The influence of corporate governance and corporate social responsibility on corporate performance: an Iberian panel data evidence

Abstract

PurposeThe main goal of this paper is to study the influence of some corporate governance, corporate social responsibility (CSR), and corporate-specific characteristics on the performance of Iberian-listed companies.Design/methodology/approachTo achieve the paper's aim, the authors have used data from 33 Portuguese-listed companies, and 60 Spanish-listed companies, for the period 2011 to 2018. To test the hypotheses, the authors employed the generalized method of moments (GMM) estimation method, developed by Arellano and Bover (1995) and Blundell and Bond (1998).FindingsThe results point out that the performance determinants vary depending on the country under analysis and the variable used to measure performance. Despite being neighbors and historically commercially close, these countries have differences in their governmental, social and economic structure that lead to different stakeholder perceptions on the determinants of corporate performance. Specifically, when the authors use Tobin's Q as a market performance variable, board independence and the existence of a CSR committee have different signs in the two countries. The same happens when return on assets (ROA) is used as an accounting variable for internal management, implying that both, managers and potential investors of the two countries have different understandings about the variables that influence their performance.Originality/valueTo the best of the authors' knowledge, this is the first study to comparatively analyze the two countries of the Iberian Peninsula, analyzing the effect of corporate governance and social responsibility characteristics on the performance. The authors' results show that managers and potential investors have different points of view regarding the importance of corporate governance and social responsibility characteristics in corporate performance.

Performance drivers in Iberian companies in different economic cycles: new evidence using panel data

“…The author affirmed that an increase in the debt level can lead to future underinvestment, as well as that the reduction in the company’s value turn ends up negatively influencing performance. The same results were achieved by Cai and Zhang (2011) and Neves et al (2022d) or Neves et al (2022c), corroborating H4 . This result revealed that debt continues to be an internal and external important factor, changing the risk potential financially and, therefore, may affect corporate performance.…”

“…The company size has a negative relationship with the EBITTURNOVER (Model 2), corroborating H2 and the studies of Almus and Nerlinger (1999), Evans (1987a) and Hall (1987). This result showed that smaller companies need to reach a stage of minimum efficiency to survive in the market in which they operate (Neves et al , 2022d). On the other hand, Model 1 (ROA) verified that there is no relationship between the company’s size and performance.…”

“…The board size variable exerts a negative influence on business performance in both models (ROA and EBITTURNOVER) (significance of 5 and 1%, respectively), corroborating H5 . These results can be justified by the fact that boards with fewer elements operate more efficiently, due to reduced coordination costs, conflicts of opinion and lack of connection, among other problems that contribute to delayed decision-making (Bantel and Jackson, 1989; Lehn et al , 2004; Neves et al , 2022d). Regarding independence on the board of directors, it has a positive influence on business performance in both models (ROA and EBITTURNOVER) with a significance level of 1%.…”

“…For both Portugal and Spain, the increase in GDP, and consequently economic growth, lead to more aggressiveness and possibly more competitiveness among companies, leading to lower performance (Neves et al , 2022b; Proença and Neves, 2022). Concerning the specific characteristics of the companies, the company size also shows a negative sign with the performance measures in both countries, demonstrating that more assets are not synonymous with more corporate value as there may not be adequate efficiency in the management of these additional resources (Neves et al , 2022d). The negative sign of indebtedness with the performance variables is also similar, showing that the stakeholders of the two neighboring countries understand that higher debt levels imply more capital outflows, impoverishing the corporate performance.…”

Globalizing the Boardroom among Family-Controlled Companies on Bursa Malaysia: The effects of corporate governance on firm performance

“…This was then supported by the findings of another study by Carvalho et al (2021), who also stated that CG has no impact on Tobin's Q. However, some research concluded a significant relationship between CG and Tobin's Q (Hossain, 2022;Neves et al, 2022).…”