Do market investors value the directors’ expertise and independence of a corporate sustainability committee? Empirical evidence from Taiwan

Abstract

This study examines whether market investors value the voluntary establishment of a sustainability committee and whether the sustainability committee directors’ characteristics drive the stock market reaction. This study uses 217 observations of Taiwanese firms for 2006–2023 and finds significantly negative cumulative abnormal stock returns (CAR) around the date of the public announcement of the sustainability committee establishment, supporting investors’ concerns over the high costs associated with establishing a sustainability committee. In addition, the committee director's expertise and independence effectively mitigated negative CAR, showing that investors reward the expertise and independence of such a sustainability committee despite the high costs.