The Effect of Board Characteristics on Corporate Social Responsibility Decoupling

Abstract

In recent years, firms have undertaken an increasing number of voluntary CSR actions. CSR reporting has become increasingly important in companies’ attempts to respond to pressures, expectations and criticisms from stakeholders who want to be better informed about the social and environmental impacts of business activities. This study contributes to the current literature by exploring the relatively new concept ‘CSR decoupling’ and by addressing the recommendations from previous studies to explore internal governance mechanisms that impact the level of CSR decoupling. This study focuses on European publicly listed firms for the years 2010 until 2019. 6.126 observations for 789 organizations are examined based on over 20 different European countries. The results indicate a negative relation between board diversity and CSR decoupling. Also, a negative relation is found between board CSR expertise and CSR decoupling. Furthermore, a positive relation is found between board independence and CSR decoupling. Additional analysis are conducted to look at the effect of the size of organizations. The additional tests showed a stronger relationship between board characteristics and CSR decoupling within larger organizations and indicate that the main analysis is robust.