Do Directors Drive Corporate Sustainability?
58 Pages Posted: 24 Apr 2020 Last revised: 2 Mar 2021
Date Written: January 20, 2021
We use the exposure of U.S. firms’ directors to the staggered introduction of sustainability reforms in foreign countries to study the role of the board of directors in shaping corporate sustainability. Using a difference-in-differences design, we document that the board has a strong impact on U.S. firms’ CSR performance. We also find that boards weigh the costs and benefits when implementing CSR changes considering firms’ financial risks and the costs of sustainability improvements. The boards’ CSR expertise matters: firms exposed to sustainability shocks have greater subsequent firm performance and greater capital and labor productivity.
Keywords: Environmental, Social, CSR, Sustainability, Directors, Boards, Shocks
JEL Classification: F30, G15, G34
Suggested Citation: Suggested Citation