Does genetic diversity on corporate boards lead to improved environmental performance?

We study the effects of boards’ genetic diversity on corporate environmental performance. Using a multidimensional information set for 3690 US firms during the period from 2005 to 2019, and three different measures of genetic diversity, we find that, pursuant to the diversity theory, which posits that diversity improves the quality of management decisions and business ethics, genetic diversity leads to improved environmental performance. We also find that genetic diversity improves carbon and governance performance, and ESG disclosure. Particularly, a one percentage point increase in boards’ genetic diversity will increase the carbon performance, measured by the inverse of the carbon emissions to total assets ratio, and environmental performance by 3.54% and 5.57%, respectively. Our results remain robust to different model specifications, while also controlling for endogeneity. In terms of policy implications, results suggest that the key to tackling climate challenges is to promote boards’ genetic diversity.

corporate carbon disclosure, corporate carbon performance, corporate environmental performance, corporate ESG disclosure, genetic diversity, genetic fractionalisation, Corporate environmental performance, Corporate carbon disclosure, Corporate carbon performance, Genetic diversity, Corporate ESG disclosure, Genetic fractionalisation

10.1016/j.intfin.2023.101756

1042-4431

Kizys, Renatas

9d3a6c5f-075a-44f9-a1de-32315b821978

Mamatzakis, Emmanuel C.

0f924aec-ee59-4da0-abf9-7102b6a46cfe

Tzouvanas, Panagiotis

f8c0fae8-aebe-406b-9df5-e40fd4c81fbb

April 2023

Kizys, Renatas

9d3a6c5f-075a-44f9-a1de-32315b821978

Mamatzakis, Emmanuel C.

0f924aec-ee59-4da0-abf9-7102b6a46cfe

Tzouvanas, Panagiotis

f8c0fae8-aebe-406b-9df5-e40fd4c81fbb

Kizys, Renatas, Mamatzakis, Emmanuel C. and Tzouvanas, Panagiotis (2023) Does genetic diversity on corporate boards lead to improved environmental performance? Journal of International Financial Markets, Institutions and Money, 84, [101756]. (doi:10.1016/j.intfin.2023.101756).

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Accepted/In Press date: 21 February 2023

e-pub ahead of print date: 24 February 2023

Published date: April 2023

Additional Information: Funding information: We are grateful to the Editor and three anonymous reviewers for their valuable feedback and suggestions to improve the quality of our paper. We are also grateful to Andreas Kaeck, Zacharias Sautner, Alex Edmans, Radu Tunaru, Steven Ongena, Mike Tsionas, Manthos Delis, Nikos Travlos, George Kapetanios, Jonathan Haskel, Richard Tol, Allan Winters, Meryem Duygun, and seminar participants at the Department of Economics and Business, University of Catania, for very helpful comments and suggestions. E C Mamatzakis acknowledges research funding from School Impact Grant, Birkbeck College, University of London, United Kingdom. None of the authors has a conflict of interest to declare. All errors are our own.

Keywords: corporate carbon disclosure, corporate carbon performance, corporate environmental performance, corporate ESG disclosure, genetic diversity, genetic fractionalisation, Corporate environmental performance, Corporate carbon disclosure, Corporate carbon performance, Genetic diversity, Corporate ESG disclosure, Genetic fractionalisation

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