Corporate boards and environment offence conviction: evidence from the United Kingdom

Abstract

Purpose: This paper reports the results of an investigation into the relationship between corporate boards and the likelihood of a firm being convicted of an environmental offence in the United Kingdom (UK).

Design/Methodology/Approach: The study uses a probit model to analyse the relationship between corporate boards and the likelihood of a firm being convicted of an environmental offence in the UK, controlling for firm size, financial leverage and profitability.

Findings: The results suggest that the likelihood of a firm being convicted of an environmental offence increases with board size, but decreases with the presence of a woman on the board. No support is found for our hypotheses about the proportion of outside directors and the presence of a lawyer on the board. Marginal effects results also show that adding one member to the board increases the chance of a firm being convicted for an environmental offence by 4.2% while having a woman on the board decreases the likelihood of a firm being convicted of an environmental offence by 31.8%.

Research limitations/implications: The sample size of 55 firms is small which could affect the generalisability of the study.

Originality/Value: The study uses proprietary data obtained from the UK Environmental Agency to provide evidence for the first time how corporate boards affect the chances of a listed firm being convicted of an environmental offence in the UK.

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Identifiers

ORCID for V. Tauringana: orcid.org/0000-0002-1433-324X

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