Gender Diversity, Political Connections and Environmental, Social and Governance Performance in China: The Moderating Role of Tenure

Abstract

This study focuses on the two corporate governance variables of gender diversity and political connections and their effects on Environmental, Social and Governance (ESG) Performance in China with the moderating role of tenure. To examine these effects, this study uses a hierarchical regression analysis to check the effects of a firm's corporate governance on ESG performance. This analysis is based on a sample of 143 listed firms that have ESG scores in China over the four years 2015–2018. In specifically, the fixed-effect regression with Driscoll-Kraay (1998) standard errors is used to correct heteroskedasticity-autocorrelation and cross-sectional correlation. Moreover, this study considered the time fixed effect and utilized the instrumental variable approach to control the model's endogeneity. The empirical results from this analysis show that gender diversity and political connection can significantly and positively affect ESG performance. As example of moderating results, Chairman’s tenure inhibits the effects of gender diversity and the political connection on ESG performance. To our knowledge, this study examines for the first time the moderating role of chairman's tenure in the impact of corporate governance on the ESG performance in the context of a weaker regulatory environment. This study's results provide a guide for investors and policymakers to make decisions about investment and ESG policy.