A Systematic Literature Review on Corporate Governance and ESG research: Trends and Future directions

Abstract

Prior research has found that the corporate governance system plays an important role in firms’ ESG outcomes. This study systematically reviews 53 research articles published in 27 journals during the last 13 years (2010-2022). We synthetize, evaluate, and extend knowledge on the role of corporate governance in ESG outcomes by covering corporate governance themes, ESG indicators, theories employed, country, methodologies, and models used to treat endogeneity. Despite the evidence on the corporate governance determinants affecting ESG outcomes, we highlight several unexplored determinants that require further research, including managerial ownership, directors’ experience, and CEO tenure. Although prior literature has predominantly focused on non-financial firms and European countries, examining the role of corporate governance in ESG outcomes in financial firms and in North American and Asian countries could significantly enrich the literature. As studies rely primarily on archival methodologies, we also call for research that adopts different approaches (e.g., qualitative and mixed research methods) and new sources of data (e.g., interviews or case studies). Finally, we discuss several research streams, identify literature gaps, and outline a detailed future research agenda.

Keywords: ESG, accounting, sustainability, corporate governance, board of directors, disclosure

JEL Classification: G30; G32; M41; Q50