Do co-opted boards protect CEOs from ESG controversies?

Abstract

We investigate the relationship between board co-option and ESG controversies using a large sample of U.S. firms from 2002 to 2018. Contrary to prior studies documenting the potential consequences of co-opted boards on organizational outcomes, we document the positive role of co-opted directors. Specifically, the CEOs of firms with a higher proportion of co-opted directors are subject to fewer ESG controversies. Our findings provide significant implications for stakeholders, redirecting the narrative on board co-option.