Renewable Governance: Good for the Environment?
65 Pages Posted: 2 Aug 2018 Last revised: 27 Jul 2020
Date Written: July 24, 2020
We test the impact of firms’ corporate governance structures (G) on firms’ environmental performance (E) using a sample of 3,293 firms from 41 countries. We find that better governance, measured using a variety of metrics, improves firms’ environmental performance. Contemporary governance mechanisms that focus on board renewal, through enhanced investor power in director elections or appointment of female directors, are associated with the greatest improvements globally. Quasi-exogenous shocks to these board renewal mechanisms support the interpretation that G drives E. Female directors have a stand-alone impact, as the positive female director effect holds when we directly control for director characteristics.
Keywords: Environmental performance, Ownership structure, Sustainability, Corporate social responsibility, ESG, Corporate governance
JEL Classification: G15, G23, G32
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