Corporate governance in a sustainable perspective. Empirical evidence from Europe

Abstract

A good corporate governance can be considered as a driver for an ethical and effective leadership by the governing body. This aim can be reached through an ethical culture, a sustainable performance, an adequate control by the board and protecting trust in organization, its reputation and legitimacy. 
 Recent corporate scandals have boosted the debate over whether companies should include CSR elements as part of their corporate goals or focus exclusively on maximizing shareholders returns (Margolis and Walsh, 2003). Corporate governance literature is increasingly focusing on the relationship between governance structure and sustainability concerns (Wagner et al., 2009; Walls et al., 2012) also in emerging countries (Sharma and Khanna, 2014; Nwagbara and Ugwoji, 2015; Garcia et al., 2017). In the same perspective, several studies analyzed the corporate governance characteristics and their association with sustainability disclosure and performance issues, but they provided mixed or unclear findings (O’Dwyer, 2005; Ewing, 2008; Michals, 2009; Prado and Garcia, 2010; Rodrigue et al., 2013; Amran et al., 2014; Peters and Romi, 2014). 
 By adopting a multi-theoretical framework (Ruf et al., 2001; Bansal, 2005; Surroca et al., 2010; Lourenço et al., 2012; Amran et al., 2014), in terms of a combination of legitimacy theory, stakeholder theory and resource-based view (RBV) theory, the research question of this study pertains the exploration of the relationship between some features of the corporate governance model and the firm environmental and social performance.
 Given the several differences among industries and countries, there is a strong need to recognize the best practices about the two “Pillars” of sustainability factors, i.e. Environmental and Social issues. Recent collapses, corporate frauds and the crisis of investors’ confidence moved toward the development of ethical codes and the companies’ orientation to a more sustainable corporate governance model that is building up all over the world. Given these premises, the empirical analysis is focused on a sample of companies listed on the major European stock markets (Western and Eastern Europe) by Bloomberg database. The data collection covers the period 2012-2017 and follows by authoritative secondary sources (Bloomberg, 2018).