The Impact of Female Board Representation on Corporate Environmental, Social and Governance Performance: A Dual Perspective Based on Institutional Environment and Market Competition

Abstract

Environmental, social, and governance (ESG) is attracting increasing attention from governments and various stakeholders. However, since incorporating a large number of environmental and social governance measures into corporate business strategies will affect a company's short-term financial performance, it is difficult for ESG strategies to gain the decision-making support of the board of directors. Female board representation, on the other hand, can address the above-mentioned challenges by virtue of their acumen in environmental subsidies and their pro-environmental market image. Nevertheless, the existing literature has not recognized the advantages of female board representation in these two aspects. Based on this, drawing on the Upper Echelons Theory and Gender Socialization Theory, this paper takes the listed companies on China's stock markets from 2014 to 2022 as a sample and uses a fixed effects model to analyze the impact of female board representation (FBR) on ESG. The research findings show that when there are two or three female board members, it significantly improves ESG performance. Secondly, from the perspective of the institutional environment, environmental subsidies amplify the positive impact of FBR on ESG. However, market competition has the opposite effect and may even offset the positive impact of environmental subsidies. The heterogeneity analysis further reveals that FBR has a greater positive impact on the ESG performance of companies in non-critical industries and those that have established environmental committees.