Corporate Governance and Corporate Social Responsibility: Evidence From Australia and New Zealand
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Recently, a growing number of studies have focused on the relationship between board characteristics and corporate social responsibility (CSR) performance because the latter is beneficial for business/company performance, company reputation, protecting the environment and society and attracting customers and investors for companies. Most research that uses aggregate CSR scores or environmental performance to evaluate/represent companies’ CSR performance and ignores social performance (e.g., De Villiers, Naiker & Van Staden, 2011). To address this issue, based on both agency and resource dependence theories, this dissertation conducts a multiple regression analysis to examine the effects of board attributes and executive compensation policy on companies’ social and environmental performance separately, using a sample of 100 New Zealand (NZ) and Australian companies over the five years between 2015 and 2019. The findings of this dissertation demonstrate that independent directors, a large board size, more directors with specific skills on the board, more female directors on the board, multiple directorships (directors serving on many boards) and senior executive compensation linked to CSR targets can stimulate companies to participate in social and environmental activities so as to improve the social and environmental performance. In addition, short director tenure is associated with better environmental performance. These results are generally robust with respect to a number of additional tests. This dissertation contributes to the existing literature. For example, the findings strengthen the reliability and generalization of current literature in this field through analysing a sample from NZ and Australia. Moreover, the findings in this study also have implications for companies, shareholders and regulators. To be more specific, the findings could help companies to improve their competitive advantage, financial performance and reputation through formulating a strong corporate governance (CG) system. For shareholders, the findings suggest that their long-term interests will be better served through appropriate adjustments to the board structure.