Do Directors Drive Corporate Sustainability?

58 Pages Posted: 24 Apr 2020 Last revised: 2 Mar 2021

See all articles by Peter Iliev

Peter Iliev

Pennsylvania State University - Department of Finance

Lukas Roth

University of Alberta - Department of Finance and Statistical Analysis; European Corporate Governance Institute (ECGI)

Date Written: January 20, 2021

Abstract

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

Iliev, Peter and Roth, Lukas, Do Directors Drive Corporate Sustainability? (January 20, 2021). Available at SSRN: https://ssrn.com/abstract=3575501 or http://dx.doi.org/10.2139/ssrn.3575501

Peter Iliev

Pennsylvania State University - Department of Finance ( email )

348 Business Building
University Park, PA 16802
United States

Lukas Roth (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32E Business Building
Edmonton, Alberta T6G 2R6
Canada
780-492-4431 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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