Corporate boards and environmental offence conviction

What is it about?

Purpose – This paper aims to report the results of an investigation into the relationship between corporate boards and the likelihood of a firm being convicted of an environmental offence in the United Kingdom (UK). Design/methodology/approach – The study uses binary logistics regression analysis to model the relationship between corporate boards and the likelihood of a firm being convicted of an environmental offence in the UK, controlling for firm size, financial leverage and profitability. Findings – The results suggest that the likelihood of a firm being convicted of an environmental offence increases with board size but decreases with the presence of a woman on the board. No support is found for the authors’ hypotheses about the proportion of outside directors and the presence of a lawyer on the board. Marginal effects’ results also show that adding one member to the board increases the chance of a firm being convicted for an environmental offence by 4.2 per cent, while having a woman on the board decreases the likelihood of a firm being convicted of an environmental offence by 31.8 per cent. Research limitations/implications – The sample size of 55 firms is small which could affect the generalisability of the study.

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Why is it important?

The study uses proprietary data obtained from the UK Environmental Agency to provide evidence for the first time how corporate boards affect the chances of a listed firm being convicted of an environmental offence in the UK.