Board composition and corporate social responsibility: Uncovering the effects of co-opted directors

Abstract

This study evaluates the effect of board composition on firm corporate social responsibility (CSR) score. We report new evidence which shows a significant and negative association between co-opted directors and the CSR score. This finding is robust to various approaches that account for endogeneity. We also show that the composition of the board of directors impacts the CSR score. The baseline model shows a strong positive association between board independence, CEO duality, women directors, and firm CSR score. Disaggregating the CSR score to its components shows that the presence of co-opted directors on the board adversely affects components of firms’ CSR score and the environment component. Non-co-opted independent directors appear to be the most effective board players in addressing the CSR aspects of the firms.