Examining the relationship between the characteristics and expertise of the board of directors and sustainability performance in companies listed on the Tehran stock exchange

Subject Areas : Corporate Finance

Saeed Pakdelan ¹ , Alireza Azarberahman ² , Saleh Rafiee ³

1 - Department of Accounting, Shandiz Institute Of Higher Education, Mashhad, Iran.
2 - Department of Accounting, Shandiz Institute Of Higher Education, Mashhad, Iran.
3 - Department of Accounting, Shandiz Institute Of Higher Education, Mashhad, Iran.

Received: 2022-11-07 Accepted : 2023-03-14 Published : 2023-03-21

Keywords: Managerial Ownership, Sustainability performance, dual role of the CEO, independence of the board of directors,

Abstract :

Purpose: The corporate sustainability performance discourse has created an increasing motivation for companies to improve their competitive advantage. The present study seeks to investigate and test the relationship between board of directors' expertise and characteristics with sustainable performance in companies listed on the Tehran Stock Exchange.methodology: Among the characteristics of the board of directors, the characteristics of the dual role of the CEO, managerial ownership and independence of the board of directors were investigated. The statistical population of the research includes 63 companies admitted to the Tehran Stock Exchange during the period from 2012 to 2019. To test the hypotheses of the research, the data was analyzed using the multiple linear regression method and using Eviewse10 and Excel software.Findings: The results of the research show that there is a positive and significant relationship between managerial ownership, the dual role of the CEO, and the independence of the board of directors with sustainability performance. In fact, the level of sustainable performance is higher in companies with managerial ownership and CEO duality, independent board of directors.Originality / Value: Based on the findings of the current research, financial market activists should pay more attention to sustainability activities and their full disclosure in financial statements, and investors should also pay more attention to the analysis of They should consider the characteristics of the board of directors and audit committee for investment.

References:

Abuzeinab, A., Arif, M., Qadri, Mohd. A., & Kulonda, D. (2018). Green business models in the construction sector: an analysis of outcomes and benefits. Construction Innovation, 18(1), 20–42.

Aksoy, M., Yilmaz, M. K., Tatoglu, E., & Basar, M. (2020). Antecedents of corporate sustainability performance in Turkey: The effects of ownership structure and board attributes on non-financial companies. Journal of Cleaner Production, 276, 124284.

Bashirimanesh, N., & Vagfi, S. H. (2021). The effect of women's presence on the board of directors on the quality characteristics of financial information of companies listed on the Tehran Stock Exchange. Woman in Development & Politics, 19(3), 477-500. [In Persian]

Behnam, S., Cagliano, R., & Grijalvo, M. (2018). How should firms reconcile their open innovation capabilities for incorporating external actors in innovations aimed at sustainable development? Journal of Cleaner Production, 170, 950–965.

Bicen, P., Hunt, S. D., & Madhavaram, S. (2021). Coopetitive innovation alliance performance: Alliance competence, alliance’s market orientation, and relational governance. Journal of Business Research, 123, 23–31.

Brick, I. E., & Chidambaran, N. K. (2010). Board meetings, committee structure, and firm value. Journal of Corporate Finance, 16(4), 533–553.

Brockhaus, S., Petersen, M., & Knemeyer, A. M. (2019). The fallacy of “trickle-down” product sustainability. International Journal of Operations & Production Management, 39(9/10), 1166–1190.

Cabral, C., & Sasidharan, A. (2021). Do regulatory mechanisms affect corporate social performance? Evidence from emerging economies. Journal of Cleaner Production, 326, 129383.

Ch’ng, P.-C., Cheah, J., & Amran, A. (2021). Eco-innovation practices and sustainable business performance: The moderating effect of market turbulence in the Malaysian technology industry. Journal of Cleaner Production, 283, 124556.

Chen, H.-L. (2014). Board Capital, CEO Power and R&D Investment in Electronics Firms. Corporate Governance: An International Review, 22(5), 422–436.

Cuomo, F., Mallin, C., & Zattoni, A. (2015). Corporate Governance Codes: A Review and Research Agenda. Corporate Governance: An International Review, 24(3), 222–241.

del Río, P., Peñasco, C., & Romero-Jordán, D. (2016). What drives eco-innovators? A critical review of the empirical literature based on econometric methods. Journal of Cleaner Production, 112, 2158–2170.

Fakoya, M. B., & Nakeng, M. V. (2019). Board characteristics and sustainable energy performance of selected companies in South Africa. Sustainable Production and Consumption, 18, 190–199.

Fang, E. (Er). (2011). The Effect of Strategic Alliance Knowledge Complementarity on New Product Innovativeness in China. Organization Science, 22(1), 158–172.

García-Ramos, R., & García-Olalla, M. (2011). Board characteristics and firm performance in public founder- and nonfounder-led family businesses. Journal of Family Business Strategy, 2(4), 220–231.

García-Ramos, R., Díaz-Díaz, B., & García-Olalla, M. (2015). Independent directors, large shareholders and firm performance: the generational stage of family businesses and the socioemotional wealth approach. Review of Managerial Science, 11(1), 119–156.

Garza, F. A. (2013). A Framework for Strategic Sustainability in Organizations: A Three Pronged Approach. Journal of Comparative International Management.

Ghisetti, C., & Rennings, K. (2014). Environmental innovations and profitability: how does it pay to be green? An empirical analysis on the German innovation survey. Journal of Cleaner Production, 75, 106–117.

Gupta, S., & Kumar, V. (2013). Sustainability as corporate culture of a brand for superior performance. Journal of World Business, 48(3), 311–320.

Hamid, N., & Purbawangsa, I. B. A. (2022). Impact of the board of directors on financial performance and company capital: Risk management as an intervening variable. Journal of Co-Operative Organization and Management, 10(2), 100164.

Haynes, K. T., & Hillman, A. (2010). The effect of board capital and CEO power on strategic change. Strategic Management Journal, 31(11), 1145–1163.

Hermalin, B. E., & Weisbach, M. S. (2006). A Framework for Assessing Corporate Governance Reform. SSRN Electronic Journal.

Ho, J., Huang, C. J., & Karuna, C. (2020). Large shareholder ownership types and board governance. Journal of Corporate Finance, 65, 101715.

Hutchins, M. J., Richter, J. S., Henry, M. L., & Sutherland, J. W. (2019). Development of indicators for the social dimension of sustainability in a U.S. business context. Journal of Cleaner Production, 212, 687–697.

Imani, F., & Farhadtoski, O. (2021). The Moderating Role of Family Ownership in the Relationship between Board Characteristics and Risk Disclosure of the Company. 7th International Conference on Management, Accounting and Economic Development. [In Persian]

Jalalianlarki, R., Bavarsad, B., & Alizadeh, S. (2021). Investigating the relationship between green management and economic performance, environmental performance and social performance (a study of companies active in the petrochemical industry). Advances in Finance and Investment, 2(4), 1-32. [In Persian]

Kibert, C. J. (2007). The next generation of sustainable construction. Building Research & Information, 35(6), 595–601.

Klarner, P., Probst, G., & Useem, M. (2019). Opening the black box: Unpacking board involvement in innovation. Strategic Organization, 147612701983932.

Loh, L., & Tan, S. (2020). Impact of Sustainability Reporting on Brand Value: An Examination of 100 Leading Brands in Singapore. Sustainability, 12(18), 7392.

McNulty, T., Zattoni, A., & Douglas, T. (2012). Developing Corporate Governance Research through Qualitative Methods: A Review of Previous Studies. Corporate Governance: An International Review, 21(2), 183–198.

Nofsinger, J. R., Sulaeman, J., & Varma, A. (2019). Institutional investors and corporate social responsibility. Journal of Corporate Finance, 58, 700–725.

Paniagua, J., Rivelles, R., & Sapena, J. (2018). Corporate governance and financial performance: The role of ownership and board structure. Journal of Business Research, 89, 229–234.

Przychodzen, J., & Przychodzen, W. (2015). Relationships between eco-innovation and financial performance – evidence from publicly traded companies in Poland and Hungary. Journal of Cleaner Production, 90, 253–263.

Rashid, A. (2018). Board independence and firm performance: Evidence from Bangladesh. Future Business Journal, 4(1), 34–49.

Sadegh Pour, F., Hosseini Masoom, M. R., & Saeidi, H. (2022). The moderating effect of research and development costs on the relationship between environmental performance and financial performance Tehran Stock Exchange companies. Advances in Finance and Investment, 3(7), 1-22. [In Persian]

Shad, M. K., Lai, F.-W., Fatt, C. L., Klemeš, J. J., & Bokhari, A. (2019). Integrating sustainability reporting into enterprise risk management and its relationship with business performance: A conceptual framework. Journal of Cleaner Production, 208(1), 415–425.

Shariatnia, A., Taherpour Kalantary, H., Jahangiri, A., & Rasouli Ghahroudi, M. (2019). The Effect of Board Characteristics on Quality of Board Processes in State-Owned Companies. Journal of Iranian Public Administration Studies, 2(4), 1-40. [In Persian]

Skripak, S. J., Cortes, A., Walz, A. R., Parsons, R., & Walton, G. (2018). Fundamentals of Business, Second Edition. VT Publishing.

Uribe-Bohorquez, M.-V., Martínez-Ferrero, J., & García-Sánchez, I.-M. (2018). Board independence and firm performance: The moderating effect of institutional context. Journal of Business Research, 88, 28–43.

Watz, M., & Hallstedt, S. I. (2020). Profile model for management of sustainability integration in engineering design requirements. Journal of Cleaner Production, 247, 119155.

Zameer, H., Wang, Y., & Yasmeen, H. (2020). Reinforcing green competitive advantage through green production, creativity and green brand image: Implications for cleaner production in China. Journal of Cleaner Production, 247, 119119.

Zhang, M., Zeng, W., Tse, Y. K., Wang, Y., & Smart, P. (2020). Examining the antecedents and consequences of green product innovation. Industrial Marketing Management.