The relationship among board of director characteristics, corporate social performance and corporate financial performance

Abstract

PurposeThe purpose of this paper is to investigate the link between qualitative measures of a firm's Board of Directors and its corporate social performance (CSP).Design/methodology/approachCSP is a function of qualitative measures of a firm's Board of Directors, as well as firm risk and financial performance. A longitudinal sample of 104 Canadian firms is used.FindingsBoard independence is positively related to social performance but shareholder orientation is not. In addition, a positive relationship between social performance with both financial performance and debt is found.Research limitations/implicationsAlthough the sample is small and restricted to Canadian firms, the results are quite robust. Future studies should consider using qualitative measures on a larger international sample of firms.Originality/valueThis paper uses qualitative measures – the degree of independence of the Board and the Board's level of shareholder orientation – to examine the interrelationship between a firm's Board of Directors and its CSP.