Informal board hierarchy and corporate ESG performance

Abstract

Against the backdrop of driving global economic sustainability, corporate Environmental, Social, and Governance (ESG) performance has gradually emerged as a crucial theoretical and practical concern. This study aims to enrich the theoretical understanding of the correlation between corporate governance and ESG. Notably, the theoretical contribution is based on the relational contract theory, indicating the significance of the informal structure and implicit characteristics of the board of directors for corporate ESG performance. Using Chinese listed firms as samples, this study empirically examines and reveals a positive correlation between the informal board hierarchy and corporate ESG performance. Moreover, based on theoretical deduction, this study identifies internal control, innovation efficiency, and financial performance as important mechanisms through which the informal board hierarchy promotes corporate ESG performance. Further analysis indicates that in firms characterized by higher board interaction, lower shareholding concentration, and the combination of the roles of chairman and CEO, the promoting effect of the informal hierarchy on corporate ESG becomes significantly more pronounced. Our findings contribute to the understanding of relational contract theory in the field of corporate sustainability, enriching the literature on corporate governance and ESG, and providing decision‐making references and practical insights for optimizing corporate development.

Research on the Path of Total Factor Productivity Improvement in Multinational Enterprises: Based on fsQCA Methodology and TOE Framework

“…On the other hand, the inability of external investors to fully access information about the international market has led to a more serious information asymmetry problem, which may lead to a higher risk premium and a significant increase in the external financing cost of MNEs. Therefore, if MNEs cannot show their proper market value and the risk is higher in the international market, the more difficult it may be for the enterprises to obtain financial support, which in turn affects the sustainable development of the enterprises.Finally, based on the high-ranking ladder theory, the characteristics of the executive team affect the strategic decisions of the enterprise, which in turn affects the behavior of the enterprise(Peng & Chen, 2024). For MNEs, executives with overseas experience have a significant impact on the high-quality development of the firm(Hambrick & Mason, 1984).…”