The impact of corporate governance on the pillars of corporate social performance and reporting: A review of archival research and implications for future research

Social and economic activities, like religion, entertainment, education, research, and the production of other goods and services, are carried on by different types of organizations, for example, corporations, proprietorships, partnerships, mutuals and nonprofits. There is competition among organizational forms for survival. The form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs. The characteristics of residual claims are important both in distinguishing organizations from one another and in explaining the survival of organizational forms in specific activities. This paper develops a set of propositions that explaim the special features of the residual claims of different organizational forms as efficient approaches to controlling agency problems. © M. C. Jensen and E. F. Fama, 1983 Michael C. Jensen, Foundations of Organizational Strategy Chapter 6, Harvard University Press, 1998. Journal of Law & Economics, Vol XXVI (June 1983) This document is available on the Social Science Research Network (SSRN) Electronic Library at: http://papers.ssrn.com/sol3/paper.taf?ABSTRACT_ID=94032 AGENCY PROBLEMS AND RESIDUAL CLAIMS

The separation of ownership from control produces a condition where the interests of owner and of ultimate manager may, and often do, diverge, and where many of the checks which formerly operated to limit the use of power disappear.... In creating these new relationships, the quasi-public corporation may fairly be said to work a revolution. It ... has divided ownership into nominal ownership and the power formerly joined to it. Thereby the corporation has changed the nature of profit-seeking enterprise.1

ABSENT fiat, the form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs.1 Our goal is to explain the survival of organizations characterized by separation of "ownership" and "control"-a problem that has bothered students of corporations from Adam Smith to Berle and Means and Jensen and Meckling.2 In more precise language, we are concerned with the survival of organizations in which important decision agents do not bear a substantial share of the wealth effects of their decisions. We argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. We contend that separation of decision and risk-bearing functions survives in these organizations in part because of the benefits of specialization of

This study provides an empirical investigation of the impact of Corporate Governance (CG) attributes on the environmental and social aspects of Corporate Social Responsibility (CSR). The dependent variables considered for the description of the environmental and social aspects of CSR were determined using the Refinitiv approach, and through the lens of agency, stakeholder, and resource dependency theories. The independent variables were selected based on the literature and involve eight CG attributes, namely: CSR committee, CEO duality, board meeting attendance, board meetings frequency, non‐executive board members, board gender diversity, board specific skills, and board experience.The employed methodology was evaluated through a sample of dependent and independent variable data of 313 companies across the European region excluding companies from the Eurozone for the period of 2006–2020. A suite of machine learning models was employed for capturing the most important determinants of the environmental and social aspects of CSR.The results reveal that three main corporate governance attributes may have a significant impact on a company's environmental and social performance. These attributes involve more female directors and directors with low board experience in board positions, and finally, the existence of CSR committees. The derived findings provide significant implications for corporate directors, socially responsible investors, policymakers, and regulators that intend to promote CSR initiatives and strategies.

PurposeThis study examines the associations between board gender diversity and banks' environmental, social and corporate governance performance in the ASEAN context.Design/methodology/approachThe study uses a sample of yearly observations for ASEAN banks over the period 2011–2016. Generalized method of moments (GMM) regression is used for the main models, and the findings are supported by other robustness tests, namely ordinary least squares (OLS) regression and panel models (fixed and random effect regression).FindingsThe findings imply that board gender diversity positively influences corporate governance performance, although it has no impact on the banks' environmental and social performance.Research limitations/implicationsThis study offers insights to regulators, investors and bank managers concerning board diversity and its impact on environmental, social and corporate governance performance. The findings imply that having a specific percentage of female directors on the board positively influences corporate governance performance. However, the impact of gender diversity on environmental and social performance is not supported.Originality/valueFew empirical studies have examined the impact of gender diversity on non-financial performance. This study contributes to the debate on the importance of gender diversity by providing empirical evidence for the impact of board gender diversity on three non-performance measures (environmental, social and corporate governance) for ASEAN banks, a topic not previously examined. There is scant attention to it in ASEAN countries, which have unique characteristics, and there remains a gap in the literature regarding the impact of board diversity among banks in this region. The findings of the study are confirmed by several robustness tests.

EUGENE FAMA and Michael Jensen's treatment of the "Separation of Ownership and Control" is both insightful and informative. It deepens our understanding of corporate control, and the analysis of residual claimants usefully extends the economics of internal organization to include partnerships, mutuals, nonprofits, and the like. The basic argument is this: specialized governance structures arise in response to the efficiency needs of each type of organization. This is an important argument and one with which I broadly concur. They couple this, however, with a strong suggestion that these structures have reached a high degree of refinement-on which account there is not now, if indeed there ever has been, an organization control problem with which scholars and others are legitimately concerned. On this point I have grave doubts. My discussion of the paper addresses three issues: What is the relation, if any, of the hierarchical organization of the firm to economic performance? What relation, if any, does residual claimant status have to the composition and character of the board of directors? And is there now or has there ever been a corporate control problem? I deal with each of these issues in order.

PurposeThis study aims to examine the determinants of the female representations on Chinese listed firm’s boards. This study also investigates the effect of gender diversity on corporate social responsibility activities.Design/methodology/approachThe Tobit regression model is used because the data is censored and using ordinary least square regression can give spurious results. For robust check, the authors also used Heckman’s (1979) two-stage self-selection model to remove the sample self-selection bias.FindingsThe authors find that the female representations on the corporate board are positively associated with firm age, firm performance, corporate governance, family ownership, institutional ownership and managerial ownership while negatively related to firm size and state ownership. This study also incorporates predictors of the critical mass of women on the Chinese listed firm’s board. The study also tests the female-led hypothesis and concludes that the female representation increases in firms with female chief executive officer (CEO) or female chairpersons. The Chinese listed firms with gender-diverse board are socially responsible.Research limitations/implicationsThe importance of diversity in corporate boards has been demonstrated in light of the agency theory and the resource dependence framework. The results contribute to the previous literature by documenting the determinants of female representations on board, robust by alternative measures of gender diversity, firm size, corporate governance and estimation techniques.Practical implicationsThe economic significance of gender diversity stirred the firms to increase female representation. The policymakers can understand the reasons for female underrepresentation in Chinese boards and can reform the regulation to enhance governance quality, non-state ownership and risk aversion among the listed firms.Originality/valueThis study contributes to the literature by providing empirical evidence on the key predictor of the world’s largest emerging economy, specifically the study focuses on the firm specific determinants, different governance attributes, ownership structure and firm risk measures. This study also seeks to answer if the presence of a female in the Chairperson or CEO position encourages the firms to hire more female directors or not?

Despite growing global attention on gender diversity in corporate governance, the extent to which board gender equality influenced corporate social responsibility remained underexplored, particularly in emerging markets with weak institutional frameworks. This study examined the impact of board gender diversity on corporate social responsibility performance among listed healthcare firms in Nigeria from 2013 to 2023. Corporate social responsibility performance was the dependent variable while board gender diversity was the independent variable, with firm-specific controls including market capitalization, firm size, leverage, profitability and financial distress. The research design adopted was ex post facto, secondary data were utilized, and the sample comprised five listed healthcare firms, and robust regression analysis was employed to analyze the study. The findings revealed a significant positive relationship between board gender diversity and corporate social responsibility performance, reinforcing stakeholder and resource dependence theories, which suggest that diverse leadership enhances ethical decision-making and sustainability orientation. These results offer compelling policy implications, advocating for stronger corporate governance regulations that mandate gender diversity in boardrooms. The study also highlighted the need for firms to view gender diversity not merely as a compliance requirement but as a strategic advantage in fostering long-term sustainability.

We examine whether domestic and foreign institutional ownership for Korean firms have any association with the dividend policy. We use dividend payout ratio and dividend yield as the proxy for dividend policy, and various types of institutional ownership by their national origin and investment horizon. We use the method of Yan and Zhang(2009) to calculate investment horizon. We found the following empirical results. First, we found that total institutional ownership has no significant relation with dividend payout ratio and dividend yield. The results for domestic or foreign institutional ownership are not significant, either. Second, when we divide institutional ownership by investment horizon, we found a positive and significant relation between long-term institutional ownership and dividend payout ratio. By contrast, short-term institutional ownership has no significant relation with dividend payout ratio and yield. Third, when we consider both investment horizon and national origin, long-term domestic institutional ownership shows a significantly positive relation with dividend payout ratio. However, short-term foregin institutional ownership has a significantly negative relation with dividend payout ratio. Accordingly we interpret the results as an evidence that long-term domestic institutions play a proper monitoring role, thereby reducing agency costs and increasing dividend payouts. In contrast, short-term foreign institutions pursue short-term capital gain rather than dividend. Overall, the main results are consistent with the hypothesis that long-term institutional ownership would lead to higher dividend payout ratio. Our findings have important implications for Korean firms that they should appeal long-term institutional investors as a major shareholder base, and enhance corporate governance structure.

PurposeThis study aims to investigate the impact of top management team (TMT)'s gender diversity on corporate social performance (CSP). It sheds light on inconsistent results in literature by testing the moderator effects of chief executive officer (CEO) managerial ability and corporate governance (CG) on such impact.Design/methodology/approachA dynamic panel estimator is applied to an international sample of 8640 firm‐year observations from 2013 to 2017.FindingsThe author finds reliable evidence that the critical mass of at least three women leaders has a positive impact on the firm's CSP. Obtained results suggest, moreover, the deterrence effects of CEO managerial ability and CG tools (board independence, board gender diversity, the presence of a corporate social responsibility committee and family control) on the women leaders' contribution to the firm's CSP level. These results remain consistent with alternative measures for women leaders and CEO managerial ability. However, findings are lost when women achieve the CEO position, the chairperson position or both positions, which imply that men and women leadership styles are closely similar rather than different. Furthermore, women leaders' effect on CSP seems dependent (do not) on the country (industry) which a firm belongs to.Practical implicationsFrom a practical standpoint, the study highlights the importance of fostering the achievement of a critical mass of women leaders and the combination of CEO managerial ability – educational/professional backgrounds – and CG attributes to improve the firm's CSP. The study has important implications for investors and regulators. If investors wish to increase CSP, they should ask for more gender diversified TMTs. Furthermore, this study supports regulators in their efforts to increase senior women's quotas by providing empirical evidence of better social outcomes under leader gender diversity. The study’s evidence is also useful for companies in setting the criteria to identify CEOs who can support their strategic decisions.Originality/valueBy studying the impact female leaders have on CSP under CEO managerial ability and CG as moderators, this study is the first to display complementarities and substitutions between CEO's managerial ability and selected CG attributes in the promotion of CSP by female senior executives. Furthermore, it fills the void on how TMT's gender diversity impact CSP. In fact, while it is conventionally considered that women are more likely to engage in socially responsible activities, sensitive findings of this study shed light on the brighter side of female executives when they achieve the CEO, the chairperson position or both positions.

Manuscript Type: Empirical Research Question: Is the relationship between corporate governance mechanisms and corporate social responsibility (CSR) contingent on satisfaction with firm performance? Research Findings/Insights: Our results suggest that while effective corporate governance discourages both positive (proactive stakeholder relationship management) and negative (violation of regulations and standards) CSR, higher slack and positive attainment discrepancy lead to higher positive and lower negative CSR, respectively. More significantly, we find that the association between effective corporate governance and both positive and negative CSR depends on satisfaction with firm performance as indicated by the levels of slack and attainment discrepancy. Put simply, the impact of corporate governance on positive CSR is more pronounced under low slack/negative attainment discrepancy conditions, and that on negative CSR is more pronounced under high slack/positive attainment discrepancy conditions. Theoretical/Academic Implications: Our study provides robust support for the behavioral theory of the firm. Previous research has not adequately considered the role of satisfaction with firm performance in studying the impact of corporate governance on managerial decision-making. We show that the association between corporate governance and CSR dimensions depends on differences in decision-making latitude originating from relative firm performance compared to those of peer firms. Practitioner/Policy Implications: First, to understand how effective corporate governance can constrain positive CSR and more importantly reduce negative CSR. Second, to appreciate that the effectiveness of an organization's governance mechanisms is contingent on slack and performance and the marginal returns from improving governance mechanisms when things are going well may be low.

This paper argues that the structure of corporate ownership varies systematically in ways that are consistent with value maximization. Among the variables that are empirically significant in explaining the variation in ownership structure for 511 U.S. corporations are firm size, instability of profit rate, whether or not the firm is a regulated utility or financial institution, and whether or not the firm is in the mass media or sports industry. Doubt is cast on the Berle-Means thesis, as no significant relationship is found between ownership concentration and accounting profit rates for this set of firms.

The purpose of this study is to explore the drivers and value-relevance of corporate social responsibility performance in the logistics sector by particularly focusing on board characteristics and ownership structure. Corporate social responsibility performance is measured with a composite ESG (environmental, social, and governance) score and with its three sub-dimensions between 2011 and 2018. Fixed Effects regression analysis was run to test the hypotheses, and subsequently, Ordinary Least Squares regression was run to test the robustness of the results. The results suggest that board gender diversity is positively associated with overall corporate social responsibility performance and governance performance. Moreover, the firms which have a sustainability committee are more likely to have greater corporate social responsibility performance (both overall and social) than those do not. Furthermore, firms with diffused ownership structures are more likely to show greater performance in the Social Pillar of corporate social responsibility. Board independence has a weak association with only governance performance. Contrary to expectations, the results regarding the value-relevance of corporate social responsibility performance did not produce significant positive outcomes. These findings confirm that women on boards and corporate social responsibility committees are an essential factor to achieve corporate social responsibility goals. However, the insignificant relationship between board characteristics and the Environmental Pillar of corporate social responsibility performance is quite surprising, and the discovery sparks various queries. Finally, logistics firms need to reconsider the competency or role of independent directors in corporate social responsibility issues as currently they are weakly influential.

This study demonstrates the empirical impact of Corporate Social Responsibility (CSR) and Corporate Governance (CG) on Firm Value (FV). The CSR was measured using the CSR index developed by KLD Research & Analytics, Inc (KLD rating model). The CSR was categorized into the following six areas including (1) environment, (2) community, (3) diversity, (4) employee relations, (5) product, and (6) corporate governance, CG was measured by the proportion of ownership structure, institutional ownership structure, and board structure. Additionally, firm value was calculated by market value using Tobin’s Q. The results revealed that the average overall CSR Score of 0.7997. Employee relation exhibited the highest score of 0.9625. On the other hand, community had the lowest score of 0.5625. Multiple regression analysis result revealed a positive overall effects of CSR and CG on FV. All six areas of CSR demonstrated consistent results with positive significant effects.

PurposeThis study aims to examine whether a change in the regulatory requirement toward gender quota for corporate leadership significantly affects the demand and therefore, it increases the presence of women directors and women CEOs. Examining the supply-side, the study also examines whether the supply for women directors and women CEOs based on the presence of qualified women who currently hold upper, middle, or lower management positions is positively related with the presence of women directors and women CEOs. Furthermore, based on the critical mass hypothesis, this study examines whether the presence of women CEOs and critical mass for women directors bring significant impacts on firms' financial and environmental, social and corporate governance (ESG) performance during the subsequent period.Design/methodology/approachUsing the multivariate regression analysis, this study empirically examines the impact of the shift in the demand for women directors and CEOs from the enactment of the Greek Law 4403/2016 on gender quota for corporate leadership. This study also examines the impact of the supply for women in corporate leadership, measured by the percentage of women who hold upper, middle, or lower management positions, on the presence of women directors and CEOs. Then, this study examines the impact of women directors and women CEOs on firms' subsequent financial and ESG performance.FindingsBased on a sample of 71 publicly listed Greek firms and 20 Cyprus listed firms as a control group during 2006–2019, the study finds evidence that both the supply-side and the demand-side bring positive effects on greater women participation in corporate boards. However, there is no evidence that the supply and demand affect the presence of women CEOs. The presence of women CEOs has a positive effect on ESG through environmental and social pillars. The study finds evidence to support the critical mass hypothesis that firms with three or more women boards tend to have higher financial and ESG performance.Social implicationsUnderstanding the supply and demand for gender diversity in corporate leadership in countries that are considered as lagging is critical to foster the global objective to level the playing field for women to participate in corporate management leadership as important part the United Nations Sustainable Development Goal (UNSDG) 5.5. The positive impact of women directors on corporate financial and social performance can be achieved, especially when the critical mass is reached. This highlights the importance of greater gender representations in corporate boards and top executive level in order to make a meaningful social change.Originality/valueThis study demonstrates that the supply of women who currently hold corporate management positions has positive influence on the presence of women boards. This study also demonstrates that a national legislation that promotes gender diversity for corporate board has a positive impact on board gender diversity among Greek listed firms. This study also highlights the importance of integrating the critical mass perspective in considering the impact of supply and demand for women in corporate leadership on firms' financial and ESG performance.