IDEAS home Printed from https://ideas.repec.org/a/wly/corsem/v30y2023i1p358-368.html
   My bibliography  Save this article

Longer board tenure and audit committee tenure. How do they impact environmental performance? A European study

Author

Listed:
  • Francesco Paolone
  • Matteo Pozzoli
  • Nicola Cucari
  • Rosario Bianco

Abstract

We analyze the impact of board of directors (BoD) tenure and audit committee (AC) tenure on environmental performance (EP) to test whether BoD and AC members' rotation generates higher environmental performance. Data were collected from the Refinitiv Eikon database, structuring a sample of European Union (EU) listed companies belonging to the “old” country members in the period from 2018 to 2020. We found that longer board tenure and longer audit committee tenure each enhance environmental performance, demonstrating that firms could view the tenure rate as a proxy of the quality of the board monitoring. On the contrary, the interaction term (BoD and AC tenure) is negatively related to environmental performance, showing that when two boards have a low rotation, companies may achieve lower environmental performance. These findings help understand the dynamic and complex nature of tenure in corporate governance mechanisms.

Suggested Citation

  • Francesco Paolone & Matteo Pozzoli & Nicola Cucari & Rosario Bianco, 2023. "Longer board tenure and audit committee tenure. How do they impact environmental performance? A European study," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 358-368, January.
    • Handle: RePEc:wly:corsem:v:30:y:2023:i:1:p:358-368
    DOI: 10.1002/csr.2359
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/csr.2359
    Download Restriction: no
    File URL: https://libkey.io/10.1002/csr.2359?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
    ---><---

    References listed on IDEAS

    as
    1. Ameeta Jain & Monica Keneley & Dianne Thomson, 2015. "Voluntary CSR disclosure works! Evidence from Asia-Pacific banks," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 11(1), pages 2-18, March.
    2. Patro, Sukesh & Zhang, Lu Y. & Zhao, Rong, 2018. "Director tenure and corporate social responsibility: The tradeoff between experience and independence," Journal of Business Research, Elsevier, vol. 93(C), pages 51-66.
    3. Michaela Bednárová & Roman Klimko & Eva Rievajová, 2019. "From Environmental Reporting to Environmental Performance," Sustainability, MDPI, vol. 11(9), pages 1-12, May.
    4. Epps, Ruth W. & Cereola, Sandra J., 2008. "Do institutional shareholder services (ISS) corporate governance ratings reflect a company's operating performance?," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 19(8), pages 1135-1148.
    5. Nidhi Bansal & Anil K. Sharma, 2016. "Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 103-116, March.
    6. Valentina Lagasio & Nicola Cucari, 2019. "Corporate governance and environmental social governance disclosure: A meta‐analytical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(4), pages 701-711, July.
    7. Walid Ben-Amar & Millicent Chang & Philip McIlkenny, 2017. "Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project," Journal of Business Ethics, Springer, vol. 142(2), pages 369-383, May.
    8. Riccardo Santamaria & Francesco Paolone & Nicola Cucari & Luca Dezi, 2021. "Non‐financial strategy disclosure and environmental, social and governance score: Insight from a configurational approach," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1993-2007, May.
    9. 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.
    10. James J. Cordeiro & Giorgia Profumo & Ilaria Tutore, 2020. "Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1127-1144, March.
    11. Livnat, Joshua & Smith, Gavin & Suslava, Kate & Tarlie, Martin, 2021. "Board tenure and firm performance," Global Finance Journal, Elsevier, vol. 47(C).
    12. repec:eme:maj000:maj-12-2020-2957 is not listed on IDEAS
    13. Luigi Lepore & Francesco Paolone & Domenico Rocco Cambrea, 2018. "Ownership structure, investors’ protection and corporate valuation: the effect of judicial system efficiency in family and non-family firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(4), pages 829-862, December.
    14. Ayuso, Silvia & Argandoña, Antonio, 2007. "Responsible corporate governance: Towards a stakeholder board of directors?," IESE Research Papers D/701, IESE Business School.
    15. Michelon, Giovanna & Pilonato, Silvia & Ricceri, Federica, 2015. "CSR reporting practices and the quality of disclosure: An empirical analysis," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 33(C), pages 59-78.
    16. Sonia Boukattaya & Abdelwahed Omri, 2021. "Impact of Board Gender Diversity on Corporate Social Responsibility and Irresponsibility: Empirical Evidence from France," Sustainability, MDPI, vol. 13(9), pages 1-14, April.
    17. Gerda Falkner & Oliver Treib, 2008. "Three Worlds of Compliance or Four? The EU‐15 Compared to New Member States," Journal of Common Market Studies, Wiley Blackwell, vol. 46(2), pages 293-313, March.
    18. My Hanh Doan & Remmer Sassen, 2020. "The relationship between environmental performance and environmental disclosure: A meta‐analysis," Journal of Industrial Ecology, Yale University, vol. 24(5), pages 1140-1157, October.
    19. Abdifatah Ahmed Haji & Mutalib Anifowose, 2016. "Audit committee and integrated reporting practice: does internal assurance matter?," Managerial Auditing Journal, Emerald Group Publishing, vol. 31(8/9), pages 915-948, September.
    20. Matthew A. Rutherford & Ann K. Buchholtz, 2007. "Investigating the Relationship Between Board Characteristics and Board Information," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(4), pages 576-584, July.
    21. Nurlan Orazalin & Monowar Mahmood, 2021. "Toward sustainable development: Board characteristics, country governance quality, and environmental performance," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3569-3588, December.
    22. 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.
    23. Gregor Dorfleitner & Christian Kreuzer & Christian Sparrer, 2020. "ESG controversies and controversial ESG: about silent saints and small sinners," Journal of Asset Management, Palgrave Macmillan, vol. 21(5), pages 393-412, September.
    24. Persefoni Polychronidou & George Drogalas & Ioannis Tampakoudis, 2020. "Mandatory rotation of audit firms and auditors in Greece," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 141-154, September.
    25. Ans Kolk & Paolo Perego, 2010. "Determinants of the adoption of sustainability assurance statements: an international investigation," Business Strategy and the Environment, Wiley Blackwell, vol. 19(3), pages 182-198, March.
    26. Sharma, Vineeta, 2011. "Independent directors and the propensity to pay dividends," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1001-1015, September.
    27. Aladdin Dwekat & Elies Seguí‐Mas & Guillermina Tormo‐Carbó & Pedro Carmona, 2020. "Corporate Governance Configurations and Corporate Social Responsibility Disclosure: Qualitative Comparative Analysis of Audit Committee and Board characteristics," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2879-2892, November.
    28. Flora Niu & Greg Berberich, 2015. "Director tenure and busyness and corporate governance," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 6(1), pages 56-69.
    29. repec:eme:maj000:maj-12-2015-1293 is not listed on IDEAS
    30. 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.
    31. Arifur Khan & Mohammad Muttakin & Javed Siddiqui, 2013. "Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy," Journal of Business Ethics, Springer, vol. 114(2), pages 207-223, May.
    32. Fernando Llena & Jose M. Moneva & Blanca Hernandez, 2007. "Environmental disclosures and compulsory accounting standards: the case of spanish annual reports," Business Strategy and the Environment, Wiley Blackwell, vol. 16(1), pages 50-63, January.
    33. Karen A. Bantel & Susan E. Jackson, 1989. "Top management and innovations in banking: Does the composition of the top team make a difference?," Strategic Management Journal, Wiley Blackwell, vol. 10(S1), pages 107-124, June.
    34. Ali M Gerged & Christopher J Cowton & Eshani S Beddewela, 2018. "Towards Sustainable Development in the Arab Middle East and North Africa Region: A Longitudinal Analysis of Environmental Disclosure in Corporate Annual Reports," Business Strategy and the Environment, Wiley Blackwell, vol. 27(4), pages 572-587, May.
    35. Dima Jamali & Asem M. Safieddine & Myriam Rabbath, 2008. "Corporate Governance and Corporate Social Responsibility Synergies and Interrelationships," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 443-459, September.
    36. 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.
    37. Habiba Al‐Shaer & Mahbub Zaman, 2018. "Credibility of sustainability reports: The contribution of audit committees," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 973-986, November.
    38. Francisco Bravo & Nuria Reguera‐Alvarado, 2019. "Sustainable development disclosure: Environmental, social, and governance reporting and gender diversity in the audit committee," Business Strategy and the Environment, Wiley Blackwell, vol. 28(2), pages 418-429, February.
    39. Nikos Vafeas, 2003. "Length of Board Tenure and Outside Director Independence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(7‐8), pages 1043-1064, September.
    40. Carl J. Kock & Juan Santaló & Luis Diestre, 2012. "Corporate Governance and the Environment: What Type of Governance Creates Greener Companies?," Journal of Management Studies, Wiley Blackwell, vol. 49(3), pages 492-514, May.
    41. Oh, Won-Yong & Chang, Young Kyun & Jung, Rami, 2018. "Experience-based human capital or fixed paradigm problem? CEO tenure, contextual influences, and corporate social (ir)responsibility," Journal of Business Research, Elsevier, vol. 90(C), pages 325-333.
    42. Gerda Falkner & Oliver Treib, 2008. "Three Worlds of Compliance or Four? The EU-15 Compared to New Member States," Journal of Common Market Studies, Wiley Blackwell, vol. 46, pages 293-313, March.
    43. Shelly W. Howton, 2006. "Effect of Governance Characteristics on the State of the Firm after an Initial Public Offering," The Financial Review, Eastern Finance Association, vol. 41(3), pages 419-433, August.
    44. Garrett A. McBrayer, 2018. "Does persistence explain ESG disclosure decisions?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1074-1086, November.
    45. Maretno Harjoto & Indrarini Laksmana & Robert Lee, 2015. "Board Diversity and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 132(4), pages 641-660, December.
    46. Lucy Wenxiang Lu & Martin Edward Taylor, 2018. "A study of the relationships among environmental performance, environmental disclosure, and financial performance," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 26(1), pages 107-130, February.
    47. Hazar Ben Barka & François Legendre, 2017. "Effect of the board of directors and the audit committee on firm performance: a panel data analysis," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(3), pages 737-755, September.
    48. Pornsit Jiraporn & Kimberly C. Gleason, 2007. "Capital Structure, Shareholder Rights, And Corporate Governance," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 30(1), pages 21-33, March.
    49. Chen, Wanyu (Tina) & Zhou, Gaoguang (Stephen) & Zhu, Xindong (Kevin), 2019. "CEO tenure and corporate social responsibility performance," Journal of Business Research, Elsevier, vol. 95(C), pages 292-302.
    50. Nikos Vafeas, 2003. "Length of Board Tenure and Outside Director Independence," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30, pages 1043-1064.
    51. Alfonso Del Giudice & Silvia Rigamonti, 2020. "Does Audit Improve the Quality of ESG Scores? Evidence from Corporate Misconduct," Sustainability, MDPI, vol. 12(14), pages 1-16, July.
    52. Belen Fernandez-Feijoo & Silvia Romero & Silvia Ruiz, 2014. "Effect of Stakeholders’ Pressure on Transparency of Sustainability Reports within the GRI Framework," Journal of Business Ethics, Springer, vol. 122(1), pages 53-63, June.
    53. Bhagat, Sanjai & Bolton, Brian, 2008. "Corporate governance and firm performance," Journal of Corporate Finance, Elsevier, vol. 14(3), pages 257-273, June.
    54. 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.
    55. 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.
    56. Rania Beji & Ouidad Yousfi & Nadia Loukil & Abdelwahed Omri, 2021. "Board Diversity and Corporate Social Responsibility: Empirical Evidence from France," Journal of Business Ethics, Springer, vol. 173(1), pages 133-155, September.
    57. DeAngelo, Linda Elizabeth, 1981. "Auditor independence, `low balling', and disclosure regulation," Journal of Accounting and Economics, Elsevier, vol. 3(2), pages 113-127, August.
    58. Healy, Paul M. & Palepu, Krishna G., 2001. "Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature," Journal of Accounting and Economics, Elsevier, vol. 31(1-3), pages 405-440, September.
    59. Natalia Semenova & Lars Hassel, 2015. "On the Validity of Environmental Performance Metrics," Journal of Business Ethics, Springer, vol. 132(2), pages 249-258, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ateeq ur Rehman Irshad & Nabeel Safdar & Zahid Irshad Younas & Wajiha Manzoor, 2023. "Impact of Corporate Governance on Firms’ Environmental Performance: Case Study of Environmental Sustainability-Based Business Scenarios," Sustainability, MDPI, vol. 15(10), pages 1-12, May.

    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. 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.
    2. Ali Uyar & Cemil Kuzey & Merve Kilic & Abdullah S. Karaman, 2021. "Board structure, financial performance, corporate social responsibility performance, CSR committee, and CEO duality: Disentangling the connection in healthcare," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1730-1748, November.
    3. Riccardo Santamaria & Francesco Paolone & Nicola Cucari & Luca Dezi, 2021. "Non‐financial strategy disclosure and environmental, social and governance score: Insight from a configurational approach," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1993-2007, May.
    4. Ammar Ali Gull & Nazim Hussain & Sana Akbar Khan & Zaheer Khan & Asif Saeed, 2023. "Governing Corporate Social Responsibility Decoupling: The Effect of the Governance Committee on Corporate Social Responsibility Decoupling," Journal of Business Ethics, Springer, vol. 185(2), pages 349-374, June.
    5. James J. Cordeiro & Giorgia Profumo & Ilaria Tutore, 2020. "Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1127-1144, March.
    6. Ge Wang & Huijin Zhang & Saixing Zeng & Xiaohua Meng & Han Lin, 2023. "Reporting on sustainable development: Configurational effects of top management team and corporate characteristics on environmental information disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 28-52, January.
    7. Thi H.H. Nguyen & Mohamed H. Elmagrhi & Collins G. Ntim & Yue Wu, 2021. "Environmental performance, sustainability, governance and financial performance: Evidence from heavily polluting industries in China," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2313-2331, July.
    8. Rania Beji & Ouidad Yousfi & Nadia Loukil & Abdelwahed Omri, 2021. "Board Diversity and Corporate Social Responsibility: Empirical Evidence from France," Journal of Business Ethics, Springer, vol. 173(1), pages 133-155, September.
    9. Pier Luigi Marchini & Veronica Tibiletti & Tatiana Mazza & Gianluca Gabrielli, 2022. "Gender quotas and the environment: Environmental performance and enforcement," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(1), pages 256-272, January.
    10. Camélia Radu & Nadia Smaili, 2021. "Corporate performance patterns of Canadian listed firms: Balancing financial and corporate social responsibility outcomes," Business Strategy and the Environment, Wiley Blackwell, vol. 30(7), pages 3344-3359, November.
    11. 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.
    12. Siew Peng Lee, 2023. "Board monitoring effectiveness and corporate sustainability performance: do legal system and CEO non-duality matter?," Review of Managerial Science, Springer, vol. 17(4), pages 1243-1267, May.
    13. Isabel-María García-Sánchez & Nicola Raimo & Víctor Amor-Esteban & Filippo Vitolla, 2023. "Board committees and non-financial information assurance services," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 27(1), pages 1-42, March.
    14. Stefania Veltri & Romilda Mazzotta & Franco Ernesto Rubino, 2021. "Board diversity and corporate social performance: Does the family firm status matter?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1664-1679, November.
    15. 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.
    16. Ayman Issa & Mohammad A. A. Zaid & Jalal Rajeh Hanaysha, 2022. "Exploring the relationship between female director's profile and sustainability performance: Evidence from the Middle East," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1980-2002, September.
    17. Sumaia Ayesh Qaderi & Belal Ali Abdulraheem Ghaleb & Abdulwahid Ahmed Hashed & Turki Raji Alhmoud & Hasnah Kamardin, 2023. "Audit Committee Leadership Attributes and CSR Reporting: Evidence from Jordan," SAGE Open, , vol. 13(3), pages 21582440231, August.
    18. Silvia Carnini Pulino & Mirella Ciaburri & Barbara Sveva Magnanelli & Luigi Nasta, 2022. "Does ESG Disclosure Influence Firm Performance?," Sustainability, MDPI, vol. 14(13), pages 1-18, June.
    19. Al-Najjar, Basil & Salama, Aly, 2022. "Mind the gap: Are female directors and executives more sensitive to the environment in high-tech us firms?," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    20. Govindan, Kannan & Kilic, Merve & Uyar, Ali & Karaman, Abdullah S., 2021. "Drivers and value-relevance of CSR performance in the logistics sector: A cross-country firm-level investigation," International Journal of Production Economics, Elsevier, vol. 231(C).

    More about this item

    Statistics

    Access and download statistics

    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:wly:corsem:v:30:y:2023:i:1:p:358-368. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1535-3966 .

    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.