IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v149y2018i2d10.1007_s10551-016-3099-5.html
   My bibliography  Save this article

Corporate Governance and Sustainability Performance: Analysis of Triple Bottom Line Performance

Author

Listed:
  • Nazim Hussain

    (Ca’ Foscari University of Venice)

  • Ugo Rigoni

    (Ca’ Foscari University of Venice)

  • René P. Orij

    (Leiden University)

Abstract

The study empirically investigates the relationship between corporate governance and the triple bottom line sustainability performance through the lens of agency theory and stakeholder theory. We claim, in fact, that no single theory fully accounts for all the hypothesised relationships. We measure sustainability performance through manual content analysis on sustainability reports of the US-based companies. The study extends the existing literature by investigating the impact of selected corporate governance mechanisms on each dimension of sustainability performance, as defined by the GRI framework. Our approach allows to identify which governance mechanisms foster triple bottom line performance, also revealing that some mechanisms fit only specific dimension(s) of sustainability. The fact-based findings provide support for a new beginning in the theorising process in which the theories must try not only to provide rationale for the impact of corporate governance on sustainability, but also to explain which dimension of sustainability might be more affected. The most important implication for practitioners is the support for sustainability practices, which may be gained through implementation of particular corporate governance mechanisms. The findings contribute also to the improvement of the ongoing standard setting process, in particular as it concerns the in-depth revision of the economic dimension of sustainability carried out under the new GRI framework.

Suggested Citation

  • Nazim Hussain & Ugo Rigoni & René P. Orij, 2018. "Corporate Governance and Sustainability Performance: Analysis of Triple Bottom Line Performance," Journal of Business Ethics, Springer, vol. 149(2), pages 411-432, May.
    • Handle: RePEc:kap:jbuset:v:149:y:2018:i:2:d:10.1007_s10551-016-3099-5
    DOI: 10.1007/s10551-016-3099-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10551-016-3099-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-016-3099-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hoje Jo & Maretno Harjoto, 2011. "Corporate Governance and Firm Value: The Impact of Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 103(3), pages 351-383, October.
    2. Haniffa, R.M. & Cooke, T.E., 2005. "The impact of culture and governance on corporate social reporting," Journal of Accounting and Public Policy, Elsevier, vol. 24(5), pages 391-430.
    3. Kevin Campbell & Antonio Mínguez-Vera, 2008. "Gender Diversity in the Boardroom and Firm Financial Performance," Journal of Business Ethics, Springer, vol. 83(3), pages 435-451, December.
    4. Rüdiger Hahn & Regina Lülfs, 2014. "Legitimizing Negative Aspects in GRI-Oriented Sustainability Reporting: A Qualitative Analysis of Corporate Disclosure Strategies," Journal of Business Ethics, Springer, vol. 123(3), pages 401-420, September.
    5. Halme, Minna & Huse, Morten, 1997. "The influence of corporate governance, industry and country factors on environmental reporting," Scandinavian Journal of Management, Elsevier, vol. 13(2), pages 137-157, June.
    6. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    7. Stephen Brammer & Stephen Pavelin, 2006. "Voluntary Environmental Disclosures by Large UK Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7-8), pages 1168-1188.
    8. Dulacha G. Barako & Phil Hancock & H. Y. Izan, 2006. "Factors Influencing Voluntary Corporate Disclosure by Kenyan Companies," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(2), pages 107-125, March.
    9. Stephen Brammer & Stephen Pavelin, 2006. "Voluntary Environmental Disclosures by Large UK Companies," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7‐8), pages 1168-1188, September.
    10. Stewart Jones & Geoff Frost & Janice Loftus & Sandra Laan, 2007. "An Empirical Examination of the Market Returns and Financial Performance of Entities Engaged in Sustainability Reporting," Australian Accounting Review, CPA Australia, vol. 17(41), pages 78-87, March.
    11. Christine Mallin & Giovanna Michelon & Davide Raggi, 2013. "Monitoring Intensity and Stakeholders’ Orientation: How Does Governance Affect Social and Environmental Disclosure?," Journal of Business Ethics, Springer, vol. 114(1), pages 29-43, April.
    12. Azlan Amran & Shiau Ping Lee & S. Susela Devi, 2014. "The Influence of Governance Structure and Strategic Corporate Social Responsibility Toward Sustainability Reporting Quality," Business Strategy and the Environment, Wiley Blackwell, vol. 23(4), pages 217-235, May.
    13. Giovanna Michelon & Antonio Parbonetti, 2012. "The effect of corporate governance on sustainability disclosure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(3), pages 477-509, August.
    14. Dulacha Barako & Alistair Brown, 2008. "Corporate social reporting and board representation: evidence from the Kenyan banking sector," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 12(4), pages 309-324, November.
    15. Gul, Ferdinand A. & Leung, Sidney, 2004. "Board leadership, outside directors' expertise and voluntary corporate disclosures," Journal of Accounting and Public Policy, Elsevier, vol. 23(5), pages 351-379.
    16. Xu, Xinpeng, 1999. "Do Stringent Environmental Regulations Reduce the International Competitiveness of Environmentally Sensitive Goods? A Global Perspective," World Development, Elsevier, vol. 27(7), pages 1215-1226, July.
    17. Irene Karamanou & Nikos Vafeas, 2005. "The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis," Journal of Accounting Research, Wiley Blackwell, vol. 43(3), pages 453-486, June.
    18. Indrarini Laksmana, 2008. "Corporate Board Governance and Voluntary Disclosure of Executive Compensation Practices," Contemporary Accounting Research, John Wiley & Sons, vol. 25(4), pages 1147-1182, December.
    19. Paula L. Rechner & Dan R. Dalton, 1991. "CEO duality and organizational performance: A longitudinal analysis," Strategic Management Journal, Wiley Blackwell, vol. 12(2), pages 155-160, February.
    20. Kamran Ahmed & Mahmud Hossain & Mike B. Adams, 2006. "The Effects of Board Composition and Board Size on the Informativeness of Annual Accounting Earnings," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(5), pages 418-431, September.
    21. Coles, Jeffrey L. & Daniel, Naveen D. & Naveen, Lalitha, 2008. "Boards: Does one size fit all," Journal of Financial Economics, Elsevier, vol. 87(2), pages 329-356, February.
    22. John, Kose & Senbet, Lemma W., 1998. "Corporate governance and board effectiveness1," Journal of Banking & Finance, Elsevier, vol. 22(4), pages 371-403, May.
    23. Pablo De Andres & Valentin Azofra & Felix Lopez, 2005. "Corporate Boards in OECD Countries: size, composition, functioning and effectiveness," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(2), pages 197-210, March.
    24. Michelle Rodrigue & Michel Magnan & Charles Cho, 2013. "Is Environmental Governance Substantive or Symbolic? An Empirical Investigation," Journal of Business Ethics, Springer, vol. 114(1), pages 107-129, April.
    25. Eng, L. L. & Mak, Y. T., 2003. "Corporate governance and voluntary disclosure," Journal of Accounting and Public Policy, Elsevier, vol. 22(4), pages 325-345.
    26. J. Emil Morhardt & Sarah Baird & Kelly Freeman, 2002. "Scoring corporate environmental and sustainability reports using GRI 2000, ISO 14031 and other criteria," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 9(4), pages 215-233, December.
    27. René Orij, 2010. "Corporate social disclosures in the context of national cultures and stakeholder theory," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 23(7), pages 868-889, September.
    28. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    29. Galbreath, Jeremy, 2011. "Are there gender-related influences on corporate sustainability? A study of women on boards of directors," Journal of Management & Organization, Cambridge University Press, vol. 17(1), pages 17-38, January.
    30. Linck, James S. & Netter, Jeffry M. & Yang, Tina, 2008. "The determinants of board structure," Journal of Financial Economics, Elsevier, vol. 87(2), pages 308-328, February.
    31. Jose-Manuel Prado-Lorenzo & Isabel-Maria Garcia-Sanchez, 2010. "The Role of the Board of Directors in Disseminating Relevant Information on Greenhouse Gases," Journal of Business Ethics, Springer, vol. 97(3), pages 391-424, December.
    32. S. Lim & Z. Matolcsy & D. Chow, 2007. "The Association between Board Composition and Different Types of Voluntary Disclosure," European Accounting Review, Taylor & Francis Journals, vol. 16(3), pages 555-583.
    33. Cheng, Eugene C.M. & Courtenay, Stephen M., 2006. "Response to discussion of "board composition, regulatory regime and voluntary disclosure"," The International Journal of Accounting, Elsevier, vol. 41(3), pages 293-294.
    34. Cheng, Eugene C.M. & Courtenay, Stephen M., 2006. "Board composition, regulatory regime and voluntary disclosure," The International Journal of Accounting, Elsevier, vol. 41(3), pages 262-289.
    35. Mohammed Hossain & Masrur Reaz, 2007. "The determinants and characteristics of voluntary disclosure by Indian banking companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 14(5), pages 274-288, December.
    36. Paul Guest, 2009. "The impact of board size on firm performance: evidence from the UK," The European Journal of Finance, Taylor & Francis Journals, vol. 15(4), pages 385-404.
    37. Ali Saleh Al Arussi & Mohamad Hisyam Selamat & Mustafa Mohd Hanefah, 2009. "Determinants of financial and environmental disclosures through the internet by Malaysian companies," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 17(1), pages 59-76, May.
    38. Jing Li & Richard Pike & Roszaini Haniffa, 2008. "Intellectual capital disclosure and corporate governance structure in UK firms," Accounting and Business Research, Taylor & Francis Journals, vol. 38(2), pages 137-159.
    39. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    40. Judith L. Walls & Pascual Berrone & Phillip H. Phan, 2012. "Corporate governance and environmental performance: is there really a link?," Strategic Management Journal, Wiley Blackwell, vol. 33(8), pages 885-913, August.
    41. Marco Allegrini & Giulio Greco, 2013. "Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(1), pages 187-216, February.
    42. Mehmoona Sharif & Kashif Rashid, 2014. "Corporate governance and corporate social responsibility (CSR) reporting: an empirical evidence from commercial banks (CB) of Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2501-2521, September.
    43. Webb, Deborah J. & Mohr, Lois A. & Harris, Katherine E., 2008. "A re-examination of socially responsible consumption and its measurement," Journal of Business Research, Elsevier, vol. 61(2), pages 91-98, February.
    44. Ans Kolk, 2008. "Sustainability, accountability and corporate governance: exploring multinationals' reporting practices," Business Strategy and the Environment, Wiley Blackwell, vol. 17(1), pages 1-15, January.
    45. Aiyesha Dey, 2008. "Corporate Governance and Agency Conflicts," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1143-1181, December.
    46. Grigoris Giannarakis, 2014. "Corporate governance and financial characteristic effects on the extent of corporate social responsibility disclosure," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 10(4), pages 569-590, September.
    47. Mohammad Jizi & Aly Salama & Robert Dixon & Rebecca Stratling, 2014. "Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector," Journal of Business Ethics, Springer, vol. 125(4), pages 601-615, December.
    48. R.M. Haniffa & T. E. Cooke, 2002. "Culture, Corporate Governance and Disclosure in Malaysian Corporations," Abacus, Accounting Foundation, University of Sydney, vol. 38(3), pages 317-349, October.
    49. Roshima Said & Yuserrie Hj Zainuddin & Hasnah Haron, 2009. "The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 5(2), pages 212-226, June.
    50. Paul Dunn & Barbara Sainty, 2009. "The relationship among board of director characteristics, corporate social performance and corporate financial performance," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 5(4), pages 407-423, September.
    51. Amy J. Hillman & Gerald D. Keim, 2001. "Shareholder value, stakeholder management, and social issues: what's the bottom line?," Strategic Management Journal, Wiley Blackwell, vol. 22(2), pages 125-139, February.
    52. Niclas L. Erhardt & James D. Werbel & Charles B. Shrader, 2003. "Board of Director Diversity and Firm Financial Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(2), pages 102-111, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Renata Konadu & Gabriel Sam Ahinful & Samuel Owusu-Agyei, 2021. "Corporate governance pillars and business sustainability: does stakeholder engagement matter?," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 269-289, September.
    2. Samaha, Khaled & Khlif, Hichem & Hussainey, Khaled, 2015. "The impact of board and audit committee characteristics on voluntary disclosure: A meta-analysis," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 24(C), pages 13-28.
    3. Giuliana Birindelli & Stefano Dell’Atti & Antonia Patrizia Iannuzzi & Marco Savioli, 2018. "Composition and Activity of the Board of Directors: Impact on ESG Performance in the Banking System," Sustainability, MDPI, vol. 10(12), pages 1-20, December.
    4. Eduardo Ortas & Igor Álvarez & Eugenio Zubeltzu, 2017. "Firms’ Board Independence and Corporate Social Performance: A Meta-Analysis," Sustainability, MDPI, vol. 9(6), pages 1-26, June.
    5. Liao, Lin & Luo, Le & Tang, Qingliang, 2015. "Gender diversity, board independence, environmental committee and greenhouse gas disclosure," The British Accounting Review, Elsevier, vol. 47(4), pages 409-424.
    6. Hichem Khlif & Kamran Ahmed & Mohsen Souissi, 2017. "Ownership structure and voluntary disclosure: A synthesis of empirical studies," Australian Journal of Management, Australian School of Business, vol. 42(3), pages 376-403, August.
    7. Jaime Guerrero-Villegas & Leticia Pérez-Calero & José Manuel Hurtado-González & Pilar Giráldez-Puig, 2018. "Board Attributes and Corporate Social Responsibility Disclosure: A Meta-Analysis," Sustainability, MDPI, vol. 10(12), pages 1-22, December.
    8. Akbas Halil Emre, 2016. "The Relationship Between Board Characteristics and Environmental Disclosure: Evidence from Turkish Listed Companies," South East European Journal of Economics and Business, Sciendo, vol. 11(2), pages 7-19, December.
    9. Abdalla Shwairef & Azlan Amran & Mohammad Iranmanesh & Noor Hazlina Ahmad, 2021. "The mediating effect of strategic posture on corporate governance and environmental reporting," Review of Managerial Science, Springer, vol. 15(2), pages 349-378, February.
    10. María Consuelo Pucheta‐Martínez & Isabel Gallego‐Álvarez, 2019. "An international approach of the relationship between board attributes and the disclosure of corporate social responsibility issues," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(3), pages 612-627, May.
    11. Simona Alfiero & Massimo Cane & Ruggiero Doronzo & Alfredo Esposito, 2018. "Determining characteristics of boards adopting Integrated Reporting," FINANCIAL REPORTING, FrancoAngeli Editore, vol. 2018(2), pages 37-71.
    12. Mohammad Jizi, 2017. "The Influence of Board Composition on Sustainable Development Disclosure," Business Strategy and the Environment, Wiley Blackwell, vol. 26(5), pages 640-655, July.
    13. Nicola Cucari & Salvatore Esposito De Falco & Beatrice Orlando, 2018. "Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(3), pages 250-266, May.
    14. Chenxi Wang & Xincai Deng & Susana Álvarez-Otero & Muhammad Safdar Sial & Ubaldo Comite & Jacob Cherian & Judit Oláh, 2021. "Impact of Women and Independent Directors on Corporate Social Responsibility and Financial Performance: Empirical Evidence from an Emerging Economy," Sustainability, MDPI, vol. 13(11), pages 1-16, May.
    15. Lucrezia Songini & Anna Pistoni & Patrizia Tettamanzi & Fabrizio Fratini & Valentina Minutiello, 2022. "Integrated reporting quality and BoD characteristics: an empirical analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(2), pages 579-620, June.
    16. Khaleed Omair Alotaibi & Khaled Hussainey, 2016. "Determinants of CSR disclosure quantity and quality: Evidence from non-financial listed firms in Saudi Arabia," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 13(4), pages 364-393, November.
    17. Hanen Ben Fatma & Jamel Chouaibi, 2021. "Corporate governance and CSR disclosure: evidence from European financial institutions," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(4), pages 346-361, December.
    18. Rupjyoti Saha & K. C. Kabra, 2020. "Corporate Governance and Voluntary Disclosure: A Synthesis of Empirical Studies," Business Perspectives and Research, , vol. 8(2), pages 117-138, July.
    19. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, October.
    20. Muhammad Kaleem Khan & R. M. Ammar Zahid & Adil Saleem & Judit Sági, 2021. "Board Composition and Social & Environmental Accountability: A Dynamic Model Analysis of Chinese Firms," Sustainability, MDPI, vol. 13(19), pages 1-18, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:149:y:2018:i:2:d:10.1007_s10551-016-3099-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.