Differences in Board Independence’s Impact on ESG with Respect to Power Constraints: Evidence from a Heterogeneity Perspective
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Business school, Guangzhou College of Technology and Business, Guangzhou, China
School of Finance, Guangdong University of Finance & Economics, Guangzhou, China
School of Economics and Management, Shanghai Maritime University, Shanghai, China
Submission date: 2023-11-04
Final revision date: 2023-11-21
Acceptance date: 2023-12-16
Online publication date: 2024-04-12
Publication date: 2024-04-18
Corresponding author
Jianbo Guan   

Business school, Guangzhou College of Technology and Business, Guangzhou, China
Pol. J. Environ. Stud. 2024;33(4):3771-3782
This study investigates the relationship between board independence, CEO power, and environmental, social, and corporate governance (ESG) performance of Chinese companies. The study finds that in industrial firms with significant environmental concerns, board independence fails to moderate the adverse effects of strong CEO power on ESG performance. This failure is attributed to management’s excessive focus on short-term profits and lack of checks and balances. However, in nonindustrial companies, the positive effect of CEO power on ESG performance can be dampened by board independence. This heterogeneity also varies among companies with different political backgrounds. Moreover, the study emphasizes the significance of potential trade-offs between short-term financial benefits and long-term sustainability objectives across regions and corporate governance methodologies.
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