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Environmental Concern, Regulations and Board Diversity

Anh Do, Ngan Duong Cao, Dimitrios Gounopoulos, David Newton

Review of Corporate Finance, Volume: 3, Issue: 1-2

Swansea University Author: Anh Do

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DOI (Published version): 10.1561/114.00000037_app

Abstract

Despite an increasing need for trustworthy ESG data and pressure from worldwide authorities to mandate climate disclosure, the Securities and Exchange Commission (SEC) has been sluggish torespond to the demand of investors for a more holistic approach. Our study demonstrates unique research setting...

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Published in: Review of Corporate Finance
Published: Now Publishers 2023
Online Access: http://dx.doi.org/10.1561/114.00000037_app
URI: https://cronfa.swan.ac.uk/Record/cronfa63213
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Abstract: Despite an increasing need for trustworthy ESG data and pressure from worldwide authorities to mandate climate disclosure, the Securities and Exchange Commission (SEC) has been sluggish torespond to the demand of investors for a more holistic approach. Our study demonstrates unique research setting in the context of local state implementation of the Regional Climate Action Plan Initiative (RAC). The empirical analysis reveals a positive correlation between RAC and environmental corporate social responsibility (CSR) for enterprises with a diverse board of directors, as defined by the Blau index. It indicates that a high-diversified board triggers an improvement in a firm’s environmental performance on average in the period following RAC. Additionally, we demonstrate that firms with a less diverse board of directors were more prone to over-invest in environmental CSR during the financial crisis. In general, this research illustrates the importance of factors other than market forces in determining ESG disclosure, such as local climate policy.
College: Faculty of Humanities and Social Sciences
Issue: 1-2