The Influence of Board Characteristics on Corporate Social Performance

Abstract

This paper explores the relationship between relevant board characteristics and the corporate social performance represented by the Social pillar of ESG scores. By applying the generalised method of moments (GMM) system version of the Arellano-Bond estimator, we analyse the 50 biggest and most traded companies in the Eurozone from 2015 to 2022. Our empirical evidence shows that more gender-diverse and independent boards, as well as the presence of a CSR sustainability committee, enhance corporate social performance. These results are largely confirmed by investigating the four sub-pillars of Social score, i.e. Human Rights, Workforce, Product Responsibility, and Community. To our knowledge, this paper is the first to highlight how high corporate governance standards positively affect the Social pillar in the Euro Stoxx 50 index context. Our findings provide important implications for several stakeholders, including regulators and policymakers. Increasing attention should be paid to board characteristics to improve corporate social performance.

Keywords:

• Corporate governance
• board characteristics
• corporate social performance
• social pillar
• social sub-pillars
• generalized method of moments (GMM)

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 LSEG Workspace is an internationally trusted data source providing detailed and comprehensive information on financial aspects and environmental, social, and governance (ESG) dynamics. Specifically, the dataset collects over 630 different ESG metrics that are historically available.