Does directors' and officers' liability insurance improve corporate ESG performance? Evidence from China

This study investigates the influence of board gender diversity on the relationship between environmental, social, and governance (ESG) performance and corporate cash holdings in Chinese A‐share listed companies from 2015 to 2022. Our research shows that ESG performance is positively associated with cash holdings. Drawing on critical mass theory, the study finds a moderating effect of board gender diversity in the relationship between ESG performance and the cash‐holding relationship. Specifically, the study finds a negative relation between ESG performance and cash holdings with the presence of a single female board member. However, this relationship shifts to a highly positive association when three or more female directors are on the board, underscoring the significant impact of gender diversity. Further heterogeneity analysis reveals that firms with a younger age profile and a strong commitment to green innovation exhibit a negative relationship between ESG performance and cash holdings. These findings highlight the complex and dynamic nature of the ESG performance‐cash holdings relationship, which varies according to specific firm characteristics. Overall, this study offers valuable insights into the multifaceted dynamics of ESG factors, enhancing our understanding of their impact on corporate financial strategies.

How does board gender diversity drive the ESG performance‐cash holdings relationship? Evidence from China

Marie,

Qi,

Elamer

et al. 2024

Do Vice Chancellors' Career Horizon Matter for University Sustainability Performance? The Moderating Role of Soft Information

Roberts,

Wang,

Elamer

2024

In the evolving landscape of higher education, leadership plays a pivotal role in directing institutional strategies towards sustainability. This study examines how the career horizons of Vice Chancellors (VCs)—often akin to CEOs in the corporate sector—influences the sustainability performance of UK universities. Using a unique hand‐collected dataset covering the years 2018–2022, our results show that shorter VC career horizons negatively impact universities' sustainability performance, indicating that VCs closer to retirement are more ethically and sustainability‐focused. Moreover, we explore how the disclosure of soft information—characterised as boilerplate and forward‐looking language in sustainability reports—affects this relationship. Our analysis indicates that this soft information significantly moderates the effects of VCs' career horizons on sustainability outcomes. Specifically, we discover that extensive use of forward‐looking and boilerplate language tends to exacerbate the negative impacts of shorter VC tenures on sustainability performance. This research contributes to the academic discourse by documenting how leadership tenure and the strategic use of narrative in public disclosures interact to shape institutional sustainability. The findings advocate for a strategic approach in leadership appointments and reporting practices, enhancing the alignment between leadership characteristics and the long‐term sustainability goals of higher education institutions.

Real Earnings Management and ESG Performance in China: The Mediating Role of Corporate Innovations

Abdelbaky,

Liu,

Mingyang

et al. 2024

This study addresses whether the positive consequences of corporate innovation can mitigate the negative repercussions of earning management practices on corporate sustainability. Specifically, it investigates the impact of real earning management (REM) practices on corporate environmental, social and governance (ESG) performance. Likewise, it explores the mediating role of corporate innovation inputs and outputs in this relationship. The study uses a sample of the A‐share listed firms in the Chinese stock market from 2011 to 2021. We measure REM activities as a comprehensive index of corporate abnormal cash flows, abnormal production costs and abnormal discretionary expenses. The Chinese firms' ESG performance is based on Huazheng's ESG rating. Corporate innovation is categorised into innovation input (i.e., R&D expenditure) and innovation output (i.e., patent applications). The study finds that REM practices inversely affect corporate ESG performance and its various pillars. Likewise, firms that engage in higher REM practices are less likely to allocate resources to innovation (i.e., lower R&D expenditure) and have a low innovation output (i.e., fewer patent applications). Nevertheless, firms with higher innovation input and/or higher innovation output exhibit higher ESG performance. Finally, the corporate innovation input and output mediate the relationship between REM practices and ESG performance, suggesting that the positive influence of innovation on ESG performance helps to mitigate the negative consequences of earnings management practices. These results underscore the significance of ethical financial practices and innovation‐driven strategies in enhancing corporate ESG performance.