Revisiting the association between corporate governance and environmental performance: does the level of boardroom orientation matter?

This study examines the relationship between corporate governance and the environmental performance of firms. We explore benchmarks for best-in-class and medium-in-class corporate governance structures among industry peers. The sample consists of firms from 22 countries from 2003 to 2017. The results indicate that the environmental performance of firms with best-in-class corporate governance structures is higher than medium-in-class corporate governance firms. We used three dimensions of environmental performance, i.e., emission reduction, resource reduction, and product innovation. The results of this study suggest that diverse, large, and independent boards are more effective in enhancing the environmental performance of firms. The research provides important implications for managers, investors, and researchers regarding the importance of relative benchmarking of corporate governance structures. Insights also include the expectation that environmental performance will change with time and that investors see more value in firms with best-in-class corporate governance mechanisms.