The impact of audit committee characteristics on ESG performance in the European Union member states: Empirical evidence before and during the COVID-19 pandemic. (15th October 2022)

• Record Type: Journal Article
• Authors: Pozzoli, Matteo; Pagani, Alessandra; Paolone, Francesco
• Is Part Of: Journal of cleaner production. Volume 371(2022)
• Publication Date: 2022-10-15
• Subjects: Audit committee -- Corporate governance -- ESG performance -- COVID-19; Factory and trade waste -- Management -- Periodicals; Manufactures -- Environmental aspects -- Periodicals; Déchets industriels -- Gestion -- Périodiques; Usines -- Aspect de l'environnement -- Périodiques; 628.5
• DOI: 10.1016/j.jclepro.2022.133411
• Languages: English
• ISSNs: 0959-6526

Abstract

Abstract: The purpose of this research is to investigate the impact of audit committee characteristics on environmental, social and governance (ESG) performance for European listed companies. This paper aims to understand how audit committee characteristics, namely, independence, expertise and tenure, influence ESG scores. The reported ESG scores and audit committee characteristics are collected from a sample of companies included in the Refinitiv Eikon database and analysed using a panel data analysis at both the country and industry levels. The sample is composed of 13 member states of the European Union and covers the period from 2018 to 2020. The results show a significant positive effect of audit committee independence and expertise on ESG performance. Moreover, audit committee tenure is found to be negatively associated with the ESG performance. These results are even statistically stronger during the pandemic period. This paper partially validates the significance of audit committee characteristics in improving ESG performance. Our analysis has implications from different perspectives, adding further information and considerations to the ongoing debate that tests the impact of the audit committee quality on ESG performance before and during the COVID-19 pandemic. Highlights: The improvement of ESG performance through audit committee characteristics. The analysis of the effect that the COVID-19 pandemic has had on audit committees' activity on ESG matters. Audit committee independence and audit committee expertise have a significant positive effect on ESG performance. Audit committee tenure has a negative and significant relationship with the ESG performance.