@article{cb045fe9861e4bf78065ee3c5b39f96d,
title = "Renewable Governance: Good for the Environment?",
abstract = "We conjecture that board renewal mechanisms—those substantive enough to renew the thinking of the board—are required before investors can address the mismatch between their preferences regarding environmental sustainability and what insiders at firms are actually doing. We identify the adoption of majority voting for directors and the introduction of a female director as two corporate governance mechanisms potentially strong enough to renew a board's thinking on sustainability. Using a sample of 3,293 firms from 41 countries, along with quasi-exogenous shocks to board renewal mechanisms in Canada and France, we find that both board renewal mechanisms are associated with significantly higher future environmental performance. Further tests provide suggestive evidence that board renewal is more strongly associated with environmental performance in settings with better institutions and more motivated institutional investors. These results suggest the importance of board renewal for alignment of firm policies with investor preferences around the world.",
keywords = "ESG, corporate governance, corporate social responsibility, environmental performance, ownership structure, sustainability",
author = "Alexander Dyck and Lins, {Karl V.} and Lukas Roth and Mitch Towner and Wagner, {Hannes F.}",
note = "Funding Information: Accepted by Luzi Hail. We thank two anonymous referees and the associate editor for valuable comments and suggestions. We also thank Bo Becker, Douglas Cumming, Shaun Davies, Xavier Giroud, Dirk Jenter, Adair Morse, Laura Starks, seminar participants at the Development Bank of Japan, Hong Kong Baptist University, Temple University, University of Alberta, University of Arizona, University of Geneva, University of Illinois at Chicago, University of Nebraska, University of Bern, University of Neuchatel, and participants at the 2019 American Finance Association Meeting, 2019 International Workshop on Financial System Architecture and Stability, 2019 Telfer Conference on Accounting and Finance, 2019 Queens Conference on Green Finance: New Directions in Sustainable Finance Research and Policy, 2019 ECGI and Bar Ilan University Conference on Executive Compensation and on Sustainability, 2018 Swedish House of Finance Conference on Sustainable Finance, 2018 UN PRI Academic Network Conference, and 2018 University of Tennessee Smokey Mountain Finance Conference for helpful comments and suggestions. We are grateful to the Social Sciences and Humanities Research Council of Canada for financial support. Lukas Roth gratefully acknowledges financial support from the Winspear Endowed Roger S. Smith Senior Faculty Fellowship. None of the authors has a conflict of interest to declare. An online appendix to this paper can be downloaded at https://www.chicagobooth.edu/jar-online-supplements. Funding Information: Accepted by Luzi Hail. We thank two anonymous referees and the associate editor for valuable comments and suggestions. We also thank Bo Becker, Douglas Cumming, Shaun Davies, Xavier Giroud, Dirk Jenter, Adair Morse, Laura Starks, seminar participants at the Development Bank of Japan, Hong Kong Baptist University, Temple University, University of Alberta, University of Arizona, University of Geneva, University of Illinois at Chicago, University of Nebraska, University of Bern, University of Neuchatel, and participants at the 2019 American Finance Association Meeting, 2019 International Workshop on Financial System Architecture and Stability, 2019 Telfer Conference on Accounting and Finance, 2019 Queens Conference on Green Finance: New Directions in Sustainable Finance Research and Policy, 2019 ECGI and Bar Ilan University Conference on Executive Compensation and on Sustainability, 2018 Swedish House of Finance Conference on Sustainable Finance, 2018 UN PRI Academic Network Conference, and 2018 University of Tennessee Smokey Mountain Finance Conference for helpful comments and suggestions. We are grateful to the Social Sciences and Humanities Research Council of Canada for financial support. Lukas Roth gratefully acknowledges financial support from the Winspear Endowed Roger S. Smith Senior Faculty Fellowship. None of the authors has a conflict of interest to declare. An online appendix to this paper can be downloaded at https://www.chicagobooth.edu/jar‐online‐supplements . Publisher Copyright: {\textcopyright} 2022 The Authors. Journal of Accounting Research published by Wiley Periodicals LLC on behalf of The Chookaszian Accounting Research Center at the University of Chicago Booth School of Business.",
year = "2023",
month = mar,
doi = "10.1111/1475-679X.12462",
language = "English (US)",
volume = "61",
pages = "279--327",
journal = "Journal of Accounting Research",
issn = "0021-8456",
publisher = "Wiley-Blackwell Publishing Ltd",
number = "1",
}