Geographical Diversity Among Directors and Corporate Social Responsibility

Abstract

AbstractPrevious research documents the importance of board of directors’ characteristics in affecting corporate social responsibility (CSR) performance. We extend this literature by focusing on one attribute of the members of the board of directors, their place of residence and its impact on CSR performance (CSRP), which has not been previously investigated. This dimension is important since there is an increasing trend in nominating directors who live far from corporate headquarters. We rely on stakeholder theory and image motivation to explain this relationship. Using a sample of Canadian firms from 2009 to 2017, we find that geographical diversity among the board of directors has a positive impact on some dimensions of CSR. In addition, our results show that the improvement in CSRP is not value destructive. Our results extend the literature on demographic characteristics of directors and its impact on directors’ decision‐making about CSR.