The impact of board characteristics on E&S performance: moderating role of institutional ownership

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PurposeThe study aims to determine the impact of board characteristics (board size, board independence, gender diversity, CSR committee) on E&S (environment and social) performance moderating the effect of institutional ownership in the emerging economy.Design/methodology/approachData were collected from DSE listed 35 banks’ annual reports from 2018 to 2023. Multiple regression analyses with fixed and random effects were carried out to examine the relationship between board characteristics and E&S performance. For robustness check and addressing endogeneity, the GMM model was undertaken. All analyses were carried out in STATA.FindingsThe research found a positive association between board size, board independence, the presence of a CSR committee and gender diversity with E&S performance. Larger boards give more resources and perspectives diversity which supports the resource dependence theory. The positive effect of independent directors and gender diversity on E&S performance ensures more ethical decision-making, which supports agency theory’s monitoring and governance perspectives and social role theory. Finally, institutional ownership significantly moderates the relationship between these board characteristics and E&S performance.Practical implicationsDiverse boards, CSR committees and special governance structures and policies should be considered by management to improve sustainability, attract institutional investors and sustain growth to organizations.Originality/valueThe research may provide novel insights into the context of DSE-listed Bangladeshi banks, in which institutional ownership’s role is essential in moderating board characteristics' impacts on E&S performance. This contributes to the literature by determining how effective governance structures can be applied to improve sustainability performance in the banking sector of emerging markets.