Director Expertise And Corporate Sustainability

50 Pages Posted: 24 Apr 2020 Last revised: 6 Mar 2023

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: March 5, 2023

Abstract

We show that U.S. firms increase their sustainability performance when their directors acquire expertise through their exposure to sustainability reforms in foreign countries where they serve as directors. Our results suggest that a board that gains sustainability expertise increases a firm’s overall sustainability performance by 7.1%. The increase in sustainability comes both from improvements in environmental and social practices. Directors also consider the tradeoffs between sustainability improvements and firm characteristics, with boards having a stronger impact on sustainability in firms from clean industries and firms that face fewer operational and financial constraints.

Keywords: Sustainability, Environmental, Social, E&S, Directors, Boards, Regulation

JEL Classification: F30, G15, G34

Suggested Citation

Iliev, Peter and Roth, Lukas, Director Expertise And Corporate Sustainability (March 5, 2023). 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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