Renewable Governance: Good for the Environment?

65 Pages Posted: 2 Aug 2018 Last revised: 14 Apr 2020

See all articles by I. J. Alexander Dyck

I. J. Alexander Dyck

University of Toronto - Rotman School of Management

Karl V. Lins

University of Utah - Department of Finance

Lukas Roth

University of Alberta - Department of Finance and Statistical Analysis

Mitch Towner

University of Arizona - Department of Finance

Hannes F. Wagner

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; European Corporate Governance Institute (ECGI)

Date Written: March 31, 2020

Abstract

We test the impact of firms’ corporate governance structures (G) on firms’ environmental performance (E) in an international sample. We find strong evidence that better governance improves firms’ environmental performance, including in settings where environmental risks are most salient. 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. Quasi-exogenous shocks to these board renewal mechanisms support a causal interpretation—that is, 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: Corporate sustainability, Corporate social responsibility, ESG, Corporate governance, Ownership structure, Insider control, Environmental performance

JEL Classification: G15, G23, G32

Suggested Citation

Dyck, I.J. Alexander and Lins, Karl V. and Roth, Lukas and Towner, Mitch and Wagner, Hannes F., Renewable Governance: Good for the Environment? (March 31, 2020). Available at SSRN: https://ssrn.com/abstract=3224680 or http://dx.doi.org/10.2139/ssrn.3224680

I.J. Alexander Dyck

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S 3E6
Canada
416-946-0819 (Phone)

Karl V. Lins

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-3171 (Phone)
801-581-7214 (Fax)

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)
780-492-3325 (Fax)

Mitch Towner

University of Arizona - Department of Finance ( email )

1130 E. Helen Street
Office 315K
Tucson, AZ 85721-0108
United States

HOME PAGE: http://www.mitchtowner.com

Hannes F. Wagner

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://mypage.unibocconi.eu/hanneswagner

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

European Corporate Governance Institute (ECGI) ( email )

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

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