Firm sustainable investment: Are female directors greener?

Abstract

Are female directors greener than their male counterparts? We investigate this issue by examining the impact of female directors on firm sustainable investment. Using data of S&P 1500 indexed firms in the United States, covering the period 2004-2016, we find a positive relationship between female directors and sustainable investment. Consistent with critical mass theory, we also find that boards with two or more female directors have a pronounced impact on sustainable investment. Moreover, female independent directors have a stronger impact on sustainable investment than female executive directors. Our additional analysis shows higher value for firms with the presence of female directors and sustainable investment. Our findings are robust to alternative variable specification, estimation techniques, and different identification strategies including the two-stage least squares, generalized method of moments, and propensity score matching. The study provides novel evidence on the role of female directors in promoting sustainable investment and adds a new dimension to the ongoing debate in sustainability literature. K E Y W O R D S environmental protection, female directors, sustainable investment 1 Although the United States has indicated its intention to withdraw from the Paris Agreement, all the major carbon-emitting countries, including China, Germany, India, Japan, and Russia, have expressed their strong intention to maintain their commitments.

Trends in the dynamic evolution of board gender diversity and corporate social responsibility

“…The articles included in this review study the relationship between the diversity of the board of directors and the CSR using multiple dependent variables, as can be seen in Figure 2. The following stand out among them: CSR as social responsibility, social performance or sustainability performance (Bear et al, 2010; Beji et al, 2020; Boulouta, 2013; Byron & Post, 2016; Cruz et al, 2019; Fernandez et al, 2019; Francoeur et al, 2019; García‐Sánchez et al, 2018; Hafsi & Turgut, 2013; M. A. Harjoto & Rossi, 2019; Landry et al, 2016; Macaulay et al, 2018; McGuinness et al, 2017; Setó‐Pamies, 2015; Uyar et al, 2020; Zhang et al, 2013; Zhuang et al, 2018), environmental performance (Birindelli et al, 2019; Cordeiro et al, 2020; Elmagrhi et al, 2018; Lu & Herremans, 2019; Walls et al, 2012), environmental investment (Atif et al, 2020; Jiang & Akbar, 2018; Wei et al, 2017), environmental lawsuits (Liu, 2018), corporate philanthropy or charitable contributions (Campopiano et al, 2019; Jia & Zhang, 2013; Williams, 2003; Wonsuk & Abebe, 2016; Zhang et al, 2018) and CSR assurance (Liao et al, 2018). Rodriguez‐Dominguez et al (2009) analyze the process of creating and implementing a code of ethics.…”

“…Specifically, 65% of the articles analyse the impact of gender diversity on CSR performance compared to 35% that do so in the information disclosures. This trend is changing, however, and the number of published academic articles that associate board gender 2020Investigates the association between board diversity characteristics and the level of disclosure of GHG information (UK) Positive Atif, Alam, and Hossain (2020) Examine the impact of female directors on firm sustainable investment (USA) Positive Beji, Yousfi, Loukil, and Omri (2020) Analyzes how the board's characteristics could be associated with CSR Positive Cordeiro, Profumo, and Tutore (2020) Study the relationship between ownership control and female board diversity in influencing corporate environmental performance (USA) Positive García-Sánchez, Oliveira, and Martínez-Ferrero (2020) Examine how female directors on boards behave towards gender issues reporting (International) Positive Orazalin and Baydauletov (2020) Examine the effects of CSR strategy and board gender diversity on environmental and social performance (Europe) Positive Pucheta-Martínez, Olcina-Sempere, and López-Zamora 2020Explore whether board gender diversity (female institutional directors) improves CSR disclosure (Spain) Positive Ramon-Llorens, Garcia-Meca, and Pucheta-Martínez (2020) Analyze the role of the socialand human capital of female directors on CSR disclosure (Spain)…”

“…Despite the numerous arguments for a greater number of female directors, and that women have made important advances in representation, the board of directors continues to be an environment dominated by men, with women constituting a small minority (Birindelli et al, 2019). Under these circumstances, some academic studies have begun to refer to critical mass theory as an explanation for the impact of female representation on boards and CSR issues (Atif et al, 2020;Cabeza-García et al, 2018;Jia & Zhang, 2013;Wei et al, 2017). This theory suggests that the influence of a subgroup depends on its size.…”

“…Francoeur et al, 2019;García-Sánchez et al, 2018;Hafsi & Turgut, 2013;M. A. Harjoto & Rossi, 2019;Landry et al, 2016;Macaulay et al, 2018;McGuinness et al, 2017;Setó-Pamies, 2015;Uyar et al, 2020;Zhang et al, 2013;Zhuang et al, 2018), environmental performance(Birindelli et al, 2019;Cordeiro et al, 2020;Elmagrhi et al, 2018;Lu & Herremans, 2019;Walls et al, 2012), environmental investment(Atif et al, 2020;Jiang & Akbar, 2018;Wei et al, 2017), environmental lawsuits(Liu, 2018), corporate philanthropy or charitable contributions(Campopiano et al, 2019;Jia & Zhang, 2013;Williams, 2003;Wonsuk & Abebe, 2016;Zhang et al, 2018) and CSR assurance(Liao et al, 2018) Rodriguez-Dominguez et al (2009). analyze the process of creating and implementing a code of ethics.…”

The Drivers of Green Investment: A Bibliometric and Systematic Review

“…Reducing greenhouse gas (GHG) emissions is a long-term problem being further analyzed by the most developed countries [26]. By promoting sustainable investments, companies not only reduce their energy consumption and carbon emissions but also improve their financial performance by increasing notoriety, operational efficiency, and maximizing new opportunities [27]. Recently, the demand for green and sustainable products has increased, and government regulations have become more and more necessary [28].…”