Corporate Ownership & Control / Volume 20, Issue 3, Special Issue, 2023

SUSTAINABILITY, CORPORATE
GOVERNANCE, AND FIRM
PERFORMANCE: EVIDENCE FROM
EMERGING MARKETS
Mohamed A. K. Basuony *, Angie Abdel Zaher **,
Mohammad Bouaddi **, Neveen Noureldin ***
* Corresponding author, Department of Accounting, School of Business, The American University in Cairo, New Cairo, Egypt
Contact details: Department of Accounting, School of Business, The American University in Cairo, AUC Avenue, P. O. Box 74,
New Cairo 11835, Egypt
** School of Business, The American University in Cairo, New Cairo, Egypt
*** Ain Shams University and University of Prince Edward Island, Universities of Canada in Egypt, New Cairo, Egypt

Abstract
How to cite this paper: Basuony, M. A. K., The purpose of this paper is to explore and investigate
Zaher, A. A., Bouaddi, M., & Noureldin, N. the influence of sustainability especially the environmental pillar
(2023). Sustainability, corporate governance,
and firm performance: Evidence from and corporate board diversity on the financial performance in
emerging markets [Special issue]. Corporate emerging markets. This study examines the effect of sustainability
Ownership & Control, 20(3), 268–276. and board composition on firm performance. The sample of this
https://doi.org/10.22495/cocv20i3siart3
study comprises 1382 firms with a total of 19199 firm-year
Copyright © 2023 The Authors observations covering a period from 2008 to 2021. These firms are
listed in the MSCI emerging markets index representing
This work is licensed under a Creative 24 emerging countries. The results show that the main index of
Commons Attribution 4.0 International
License (CC BY 4.0). sustainability (ESG index) and other sub-indices (environmental
https://creativecommons.org/licenses/by/ score, emission score and CO2 equivalent emission) of
4.0/ sustainability that are used as measures of climate change have
ISSN Online: 1810-3057 an effect on accounting-based performance (return on assets, ROA)
ISSN Print: 1727-9232 and market-based performance (Tobin’s Q and book-to-market
value, BTMV). Also, the results show that age, nationality and
Received: 12.05.2023
Accepted: 23.06.2023
education as board diversity components affect the firm
performance; however, the female directors on the board did not
JEL Classification: G30, G32, G34 affect the firm performance.
DOI: 10.22495/cocv20i3siart3
Keywords: Green House, Firm Performance, Board Composition,
Gender Diversity

Authors’ individual contribution: Conceptualization — M.A.K.B., M.B.,

and N.N.; Methodology — M.A.K.B. and M.B.; Software — M.B.;
Validation — A.A.Z. and N.N.; Formal Analysis — M.A.K.B. and M.B.;
Investigation — A.A.Z. and N.N.; Resources — A.A.Z. and N.N.; Data
Curation — M.A.K.B.; Writing — Original Draft — A.A.Z. and N.N.;
Writing — Review & Editing — A.A.Z. and N.N.; Supervision —
M.A.K.B. and M.B.

Declaration of conflicting interests: The Authors declare that there is no

conflict of interest.

Acknowledgments: This paper is part of a project funded by

The American University in Cairo, New Cairo, Egypt.

1. INTRODUCTION resources toward reducing climate change.

greenhouse gas (GHG) emissions, particularly carbon
With a fresh perspective of sustainable development, dioxide emissions that cause global warming, have
pressure is being placed on big businesses to direct been viewed as a major environmental problem

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following events like the Rio Earth Summit in 1992 market-based measures, which would provide
and the Kyoto Protocol in 1997. Because businesses imperative insights to policymakers and businesses
are responsible for a sizable portion of GHG on the importance of environmental performance,
emissions, particularly those resulting from energy and more specifically in emerging markets.
use during their production operations, it is Moreover, the environmental performance has been
imperative that the quantity of GHGs they produce measured by testing four indices as identified:
be decreased in order to combat global warming environmental, social, and governance score (ESG),
(Bernstein et al., 2007; Bradford & Fraser, 2008). environmental pillar, emissions score and carbon
Moreover, the climate conference in Sharm el-Sheikh dioxide emissions. Furthermore, the study has
in Egypt (COP 27) and the United Nations Conference incorporated corporate governance variables: board
of the Parties (COP 26) in Glasgow have received size, board age, board nationality, board education,
pledges from different countries across the globe. board independence, female on board, and CEO
Despite all the regulations that policymakers have duality. The major research question in our paper is:
undertaken, companies are encouraged to reduce RQ: How does sustainability especially
GHG emissions voluntarily instead of being required the environmental pillar and corporate governance
mandatorily by policies, where doing this voluntarily mechanisms influence the financial performance in
is considered more lenient and less expensive, which emerging markets?
is much better than direct and indirect regulations The findings of the study indicate that the main
(Arimura et al., 2008; Ikkatai et al., 2008). index of sustainability (ESG index) and other
Researchers and environmental advocates sub-indices (environmental score, emission score
believed that empirical evidence of a causal and CO2 equivalent emission) of sustainability that
relationship between corporate environmental are used as measures of climate change have
performance and corporate financial performance affected accounting-based performance (ROA) and
would persuade commercially astute managers to market-based performance (Tobins’Q and book-to-
lessen their organizations’ environmental effects. market value, BTMV). Also, the results show that age,
Although there have been several practical studies nationality and education affect the firm
and a significant amount of academic research on performance; however, the female directors on
the subject (Etzion, 2007; Ambec & Lanoie, 2008; the board are not affecting the firm performance.
Molina-Azorin et al., 2009), there is disagreement The rest of the paper is structured as follows.
over whether or not ―becoming green‖ is profitable. In Section 2, an overview of the literature and
Furthermore, in the United States, the United hypotheses development have been presented.
Kingdom, Germany, and Japan, numerous studies Section 3 provides a description of the data and
were conducted to determine whether environmental the research methodology. Then, in Section 4,
and economic outcomes could be achieved the empirical results of the study are presented.
simultaneously or not (Hart & Ahuja, 1996; Section 5 concludes the paper.
Al-Tuwaijri et al., 2004; Nakao et al., 2007).
Although some studies are being done to 2. LITERATURE REVIEW AND HYPOTHESES
determine the association between GHG and DEVELOPMENT
corporate financial performance (Busch & Hoffmann,
2011; Delmas & Nairn-Birch, 2011), earlier studies As many countries pledges in the National Climate
have shown contradictory findings. The results of Change Strategy 2050, this has risen their focus on
some research highlight the potential economic five main objectives, including cutting emissions in
advantages of businesses reducing their GHG various sectors to maintain sustainable economic
emissions (Boiral et al., 2012). Others demonstrate growth, promoting the use of renewable energy
that the GHG policies and measures actually put into sources, producing energy from waste, and using
practice typically have few direct effects (Ernst & alternative energy forms like green hydrogen.
Young, 2010; KPMG, 2008). Most of the studies have Witnessing the research on this topic of climate
been conducted in developed countries, while there change has taken various avenues when it comes to
are few studies that focused on emerging countries, firm effects such as value relevance, information
thus data on emerging markets would provide asymmetry, financial performance, and cost of
intriguing intuition with respect to the relationship capital as well as corporate governance. The need for
between environmental performance and financial a cleaner environment has been fostered
performance. dramatically, and various studies have been done to
The lack of consensus in the literature’s investigate the link between a company’s
findings regarding how environmental performance environmental performance and its financial
affects financial performance in emerging countries performance. While carbon disclosures do not
is what makes our study interesting. The study has directly influence operating companies’ performance,
employed ordinary least squares regression (OLS) to it does impact their financial performance by
determine whether there is any connection between improving firm transparency and reducing risk and
environmental performance and the financial therefore reducing information asymmetry (Lueg
success of companies in emerging markets as et al., 2019). In metanalysis research that has been
evaluated by return on assets (ROA), Tobin’s Q, and done by Busch and Lewandowski (2018), which
book-to-market value. Thus, this study contributes examined 32 studies, it was found a positive
to the literature in several ways. First, conducting significant relationship between environmental and
our tests adds to the ongoing debate on whether financial performance (Albertini, 2013; Dixon-Fowler
environmental performance impacts financial et al., 2013; Endrikat et al., 2014; Hang et al., 2019;
performance as proxied by both accounting and Horvathova, 2010). However, another study that

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combined earlier empirical findings on the effects of emissions in financial disclosure. In addition,
both favourable and unfavourable corporate companies are attempting to develop new
environmental performance-related events on environmental strategies to ensure long-term
the stock market, has found a significant correlation viability (Guenther & Hoppe, 2014). Various research
between positive market responses to positive has highlighted the financial performance
occurrences and negative market responses to connection to climate change performance
negative ones. Additionally, the results demonstrate measures, but the conclusions of the relationship
that market responses to negative occurrences remain unclear and belligerent (Guenther & Hoppe,
are stronger than those to favourable events 2014; Lei & Wang, 2014; Mandina et al., 2014).
(Endrikat, 2016). As the government’s main objective is to
During the last few decades, significant promote a firm’s long-term growth, while
changes in Earth’s environment have occurred. implementing policies and controls that will
Burning of fossil fuels releases harmful pollutants discourage managers from self-serve, one of the core
that have a negative impact on the air, water, and objectives of corporate governance is to establish
soil such as global warming, acid rain, deforestation a good relationship between the firm’s and society’s
and ozone depletion. Some wastes have a negative goals (Thomsen & Conyon, 2012). Corporate
effect on water’s purity and validity in addition to governance is a notion that businesses use to
several acts that are not for the sake of Earth’s improve their performance and ensure their
health. The main contributor to these effects is firms long-term viability. Corporate governance establishes
that do not act in favour of the environment. Firms the framework for all stakeholders’ relationships by
do not put into consideration plans to control establishing laws and rules.
pollution and save the Earth (Bernstein, 2007). Some studies had reflected on multiple
Furthermore, each environmental problem has its directorship executive characteristics but found
own features, such as the length of time it has limited results regarding age, education and
existed, the severity of the problem, the restrictions multiple directorships of top executives (Haque,
that have been implemented, and the extent of 2017). Based on Echelon’s theory, such chief
pollution. As a result, each stakeholder has a unique executive officer (CEO) characteristics as education,
perspective on each environmental issue. To put it tenure, and salary can influence how the CEO’s
another way, certain stakeholders may regard global governing characteristics would impact carbon
warming as one of the most pressing issues, while performance (Hambrick & Mason, 1984). Moreover,
others believe the waste problem is the most CEO tenure as well as his or her education was seen
as positively impacting carbon emission disclosure
harmful. As a result, there are more arguments
(Ma et al., 2019; Lewis et al., 2014). Firms that have
about how to rank and deal with environmental
a CEO that reports on climate emission performance
issues (Iwata & Okada, 2011).
tend to be less likely to engage in corporate
Shareholder theory sees ESG as an intrinsic
manipulation as they self-regulate. Firms that do
intangible powerful asset that can hinder
such disclosure are less likely to engage in tax
management self-serving behaviour and pushes
avoidance (Hoi et al., 2013) and less likely to be
further for self-discipline (Gao et al., 2014). From involved with insider trading schemes as the agency
the four perspectives demonstrated by Garriga problem is reduced (Gao et al., 2014).
(2004) besides social responsibility, other theories Sayih et al. (2018) stated that having
such as ethical theories, political theories, an independent board that is diverse can have
integrative theories, and instrumental theories a positive impact on carbon emission disclosure
should be considered. Ethical theories view ESG as together with Jaggi et al. (2018) and Liao et al.
an ethical obligation that a firm will pursue to (2015). While Akbas and Canikli (2019) and Kılıç and
contribute morally to society, which fosters Kuzey (2019) did not confirm these results. Research
responsibility within the firm that will result in that was done on board composition or diversity did
a high level of transparency (Gelb & Strawser, 2001; indicate a positive effect on carbon performance and
Hoi et al., 2013; Bereskin et al., 2020). Under disclosure. Moreover, having at least three females
the ethical theory, governance is strengthening on the board tends to increase carbon disclosure
within the firm by starting with its employees (Kim, performance (Ben-Amar et al., 2017; Haque, 2017;
2014), and managing quality disclosures to enhance Liao et al., 2015) as well as with foreign diversity on
stakeholder value (Kim, Webster et al., 2012). the board (Kılıç & Kuzey, 2019).
Most of the research has focused on overall Ben-Amar et al. (2017) found that more
environmental performance, but only a few have managerial ownership and having an environment
looked at GHG emissions. The literature had committee on its board can have a positive impact
documented a positive relationship between social on carbon emission disclosure (Haque, 2017; Liao,
performance measure and financial performance 2015; Ben-Amar & Mcllkenny, 2017). Kılıç and Kuzey
(Albertini, 2013; Busch & Lewandowski, 2018; (2019) stated that board independence, sustainability
Dixon-Fowler et al., 2013; Endrikat et al., 2014; Hang committee and foreign board diversity had a positive
et al., 2019; Horvathova, 2010; Margolis & Walsh, impact on carbon disclosure. Having a strong
2003; Orlitzky et al., 2003). Companies that disclose external corporate governance structure can have
carbon emission performance to reduce their risk a strengthening effect that can reduce the incidence
profile may reflect positive financial performance of corporate fraudulent meaning that it will
(Matsumura et al., 2013). Companies that tend to implement anti-corruption measures in place
please their customers when it comes to carbon (Zhang, 2018). Hence, the following hypotheses were
emission footprint verge to impact their revenue line derived as follows.
higher and manage to sustain better than those who H1: Corporate sustainability has a significant
do not (Lemma et al., 2019). Recently, there has been association with accounting and market-based-
a lot of discussion about how to reduce harmful performance.

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H2: There is a significant association between was gathered from the BoardEx database. Moreover,
the female on board and the firm financial the sustainability, firm-specific characteristics and
performance. firm performance are collected from the Datastream
H3: There is a significant association between database.
the board’s age and firm financial performance.
H4: There is a significant association between 3.2. Measurement of variables
the board’s education and firm financial
performance. Table 1 shows the dependent variables, which
H5: There is a significant association between consist of accounting-based performance (ROA) and
the nationality of the board and the firm financial
market-based performance (Tobin’s Q and BTMV),
performance.
whereas the independent variables consist of
sustainability indices (ESG, environmental, emission,
3. RESEARCH METHODOLOGY and CO2 equivalent emission); corporate governance
as represented by the board age, board education of
3.1. Sample and data collection executive and non-executive, board executive and
non-executive nationality, board size, female
The sample of this study comprises 1382 firms with
executive directors, female non-executive directors,
a total of 19199 firm-year observations covering
board independence and CEO duality. Besides,
a period from 2008 to 2021. These firms are listed
in the MSCI emerging markets index representing including firm characteristics variables such as firm
24 emerging countries. The data was collected from size and leverage
different databases. The corporate governance data

Table 1. Variables of the study

Variables Definition Source

Dependent variables
ROA Return on asset Datastream
Tobins’Q Market-based performance Datastream
BTMV Book-to-market value Datastream
Independent variables
CO2 CO2 emission Datastream
Emiss Emission score Datastream
Env Environmental pillar score Datastream
ESG ESG score Datastream
BS Board size BoardEX
F-EX Executive females on board BoardEX
F-NEX Non-executive females on board BoardEX
AgeEX Average age of executive directors BoardEX
AgeNEX Average age of non-executive directors BoardEX
EdEx Average number of education for executive directors BoardEX
EdNEX Average number of education for non-executive directors BoardEX
NatEX Nationality mix for executive directors BoardEX
NatNEX Nationality mix for non-executive directors BoardEX
BrdInd Board independence BoardEX
CEOD CEO duality BoardEX
FS Firm size Datastream
Lev Leverage Datastream

3.3. Model specification

(4)
The estimated equations are:

where, Y is the ROA, Tobins’ Q and BTMV for all

(1)
the previous equations.

4. DATA ANALYSIS

(2) 4.1. Descriptive statistics

Table 2 shows the descriptive statistics of mean,

median, maximum and minimum and standard
deviation for sustainability as dependent variables
(CO2 emission score, environmental score, and ESG
(3) score) and for the corporate governance and firm
characteristics as independent variables.

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Table 2. Descriptive statistics

Variable Mean Median Maximum Minimum Std. Dev.

CO2 5889437 401252 240000000 0.00 22726745
Emiss 64.35 67.61 99.89 0.68 23.45
Env 56.90 58.28 98.39 2.08 20.58
ESG 59.14 59.32 92.75 13.15 15.90
Lev 0.23 0.21 0.89 0.00 0.17
BS 16.26 16.11 21.09 12.15 1.38
AgeEx 55.83 55.30 84.00 40.00 6.27
AgeNEX 61.15 60.60 83.00 40.00 5.43
F-EX 5.74 0.00 66.70 0.00 12.95
F-NEX 14.45 12.50 66.70 0.00 13.17
EdEX 2.24 2.00 6.20 0.00 0.95
EdNEX 2.57 2.60 5.30 0.30 0.70
NatEX 0.06 0.00 0.70 0.00 0.16
NatNEX 0.24 0.20 0.80 0.00 0.24
BS 11.59 11.00 24.00 5.00 3.24
CEOD 0.01 0.00 1.00 0.00 0.10
BrdInd 0.28 0.25 0.77 0.05 0.14

4.2. Analysis and discussion negative association with BTMV at a significance

level of 1%. As for the nationality mix of
The results of the CO2 emission as the first the non-executives on the board, the relationship is
independent variable are shown in Table 3, in which insignificant with ROA and Tobin’s Q, whereas
it has been demonstrated that the carbon dioxide the relationship is positively significant with BTMV
has a positive significant association with at a significance level of 10%.
the financial performance at a significance level of
1%, which is consistent with previous literature Table 3. Carbon dioxide, corporate governance and
(Albertini, 2013; Busch & Lewandowski, 2018; financial performance
Dixon-Fowler et al., 2013; Endrikat et al., 2014; Hang
et al., 2019; Horvathova, 2010; Margolis & Walsh, Variable ROA Tobin’s Q BTMV
Constant 35.5833*** 0.0111*** -1.4641**
2003; Orlitzky et al., 2003). Moreover, the average
CO2 0.0133*** 1.78E-6*** 0.0018***
age of executive directors of the board has Lev -9.2682*** -0.0026*** 0.1751*
an insignificant negative relationship with ROA, FS -2.0997*** -0.0006*** 0.1498***
whereas it has a significant negative association with AgeEX -0.0228 -3.46E-05*** 0.0072***
Tobin’s Q at a significance level of 1%; while it has AgeNEX 0.1169*** 4.73E-05*** -0.0094***
a significant positive effect on BTMV. Furthermore, F-EX 0.0041 4.40E-07 -0.0002
with regard to the association between the average F-NEX -0.0044 7.50E-06* -0.0001
EdEX -0.231 -0.0001*** 0.0016
age of non-executive directors of the board,
EdNEX 0.7792*** 0.0001 -0.0728**
it has been illustrated that there is a significant NatEX 3.0753*** 0.0004* -0.1791***
positive relationship between ROA and Tobin’s Q NatNEX 0.5291 0.0001 0.177*
at a significance level of 1%; however, there is BS -0.0287 0.00000174 -0.0111*
a significant negative association with BTMV at CEOD -7.6865 0.0003 -0.135
a significance level of 1%. As for the gender diversity BrdInd 1.9983*** 0.0003 0.3656***
relationships, the executive females on board have Note: ***, **, * mean statistically significant at 1%, 5% and
10% level respectively.
an insignificant relationship with financial
performance. The same for the non-executive
Table 4 displays the findings of emission score
females on board in relationship with ROA and
as the second independent variable. It has been
BTMV, whereas, it is a significant positive
established that, at a significance level of 1%, there is
association with Tobin’s Q at a 10% confidence level. a positive significant correlation between emission
With regards to the education of executives and score and financial performance. Additionally,
non-executives on the board, the analysis has shown the average age of the board’s executive directors
that the average education for executive directors has an insignificant impact on ROA, but a significant
has an insignificant impact on both ROA and BTMV, negative link with Tobin’s Q at a significance level of
but it has a significant negative association with 1%, and a significant positive impact on BTMV at
Tobin’s Q. The average education of non-executive a significance level of 1%. Furthermore, it has been
directors has a significant positive association with demonstrated that there is a significant positive
ROA at 1% significance level and significant negative relationship between ROA and Tobin’s Q and
relationship with BTMV at 5% significance level; the average age of non-executive directors of
however, such relationship is insignificant with the board at a significance level of 1%, but that there
Tobin’s Q. The results of studies by Fern ánaez- is a significant negative relationship with BTMV at
Temprano and Tejerina-Gaite (2020), and Boadi and a significance level of 1%. In terms of gender
Osarfo (2019) suggest a negative effect of education diversity relationships, the number of female
on firm performance. As for the nationality mix of executives has an insignificant bearing on financial
executives and non-executives on board in success. The same is true for the non-executive
relationship with the financial performance, female board members in relation to ROA, Tobin’s Q
the nationality mix of executive directors on board and BTMV. Average non-executive director education
has a significant positive relationship with ROA has an insignificant link with ROA, but a significant
at a significance level of 1%, and Tobin’s Q at negative association with Tobin’s Q at a 1%
a significance level 10%, but it has a significant significance level and a significant negative

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relationship with BTMV at a 5% significance level. Table 5. The environmental pillar score, corporate
The nationality mix of executive directors on governance, and the financial performance
the board has a significant negative relationship
with ROA, Tobin’s Q and BTMV at a significance level Variable ROA Tobin’s Q BTMV
of 1%. The nationality mix of the non-executives on Constant 40.0047*** 0.0133*** -1.5031***
the board has an insignificant association with ROA Env 14017.87* 6.1610*** 2046.6180***
or Tobin’s Q, but it does have a significant positive Lev -9.0897*** -0.0030*** 0.2340***
FS -2.4144*** -0.0008*** 0.1499***
relationship with BTMV at a significance level of 5%.
AgeEX 0.0043 -3.12E-5*** 0.0068***
AgeNEX 0.0836*** 4.22E-6*** -0.0103***
Table 4. Emission score, corporate governance, and F-EX 0.0095 1.94E-06 0.0005
financial performance F-NEX -0.0076 3.45E-06 -0.0007
EdEX -0.2369 -7.22E-05*** -0.0205***
Variable ROA Tobin’s Q BTMV EdNEX 0.7676*** 0.0002*** -0.0483**
Constant 39.9200*** 0.0131*** -1.5173*** NatEX 1.6362* 0.0006 -0.1105
Emiss 11801.7200** 2.5722** 1682.0420*** NatNEX -0.5801 -0.0003 0.1266**
Lev -9.1269*** -0.0030*** 0.2291*** BS 0.0468 -1.63E-05** -0.0114***
FS -2.3915*** -0.0008*** 0.1532*** CEOD -5.9092 0.0002 -0.1074
AgeEX 0.0009 -3.14E-5*** 0.0063*** BrdInd 2.7659*** 0.0003* 0.3115***
AgeNEX 0.0843*** 4.39E-5*** -0.0102*** Note: ***, **, * mean statistically significant at 1%, 5% and
F-EX 0.0099 1.96E-06 0.0005 10% level respectively.
F-NEX -0.0073 4.14E-06 -0.0007
EdEX -0.2255 -7.04E-5*** -0.0192*** Table 6 displays the findings of the ESG as
EdNEX 0.7390*** 0.0002*** -0.0519** the fourth independent variable. It has been found
NatEX 1.7029* 0.0006** -0.1002 that there is a significant positive association
NatNEX -0.5831 -0.0003 0.1283**
BS 0.0445 -1.55E-5** -0.0117***
between the ESG score and both financial
CEOD -5.9981 0.0002 -0.1212 performance measures; as ESG is positively
BrdInd 2.7506*** 0.0003* 0.3097*** significant with ROA and Tobin’s Q at a 1%
Note: ***, **, * mean statistically significant at 1%, 5% and significance level and with BTMV at a significance
10% level respectively. level of 10%. Although it has an insignificant impact
on ROA, the average age of the board’s executive
The results supporting the environmental score directors has a significant negative association with
as the third independent variable are shown in Tobin’s Q at a significance threshold of 1% and
Table 5. It has been determined that there is a significant positive association with BTMV at
a positive significant relationship between the same level. Additionally, it has been
environmental pillar score and financial performance demonstrated that, at a significance level of 1%,
at a significance level of 1%. The average age of there is a significant negative link with BTMV, but
the executive directors of the board has a significant positive relationship with ROA, and
an insignificant effect on ROA, but a significant Tobin’s Q at 5% and 1% significance levels
negative relationship with Tobin’s Q at a significance respectively. The number of female executives and
level of 1%, and a significant positive relationship non-executives has insignificant relationships on
with BTMV at a significance level of 1%. Additionally, both the accounting- and market-based financial
it has been shown that there is a significant negative performance indicators, which confirms previous
association with BTMV at a significance level of 1%, studies according to Amrani et al. (2022),
but a significant positive relationship with ROA, El-Chaarani et al. (2022), and Fernánaez-Temprano
Tobin’s Q, and the average age of non-executive
and Tejerina-Gaite (2020), there is an insignificant
directors of the board. In terms of the associations
influence of board gender on firm performance.
between gender diversity and financial performance,
The average executive director’s education level has
the proportion of female executives and non-
an insignificant relationship with ROA, but it does,
executives is insignificant to both the accounting
at the 1% level of significance, have a significant
and market-based financial performance measures.
inverse relationship with Tobin’s Q and BTMV.
Average executive director education level shows an
Regarding the average non-executive education level,
insignificant relationship with ROA, but it does have
at a 1% level of significance, a significant positive
a significant inverse relationship with Tobin’s Q and
association between ROA and Tobin’s Q is found,
BTMV at the 1% level of significance. As for
whereas, at a 5% level of significance, a significant
the average non-executives education level,
negative relationship is found between BTMV and
a significant positive relationship is revealed with
ROA. The nationality mix of executive directors on
ROA and Tobin’s Q at a 1% significance level,
the board has a significant positive relationship with
whereas a significant negative impact on BTMV at
ROA at a significance level of 1% and Tobin’s Q at
a 5% significance level. At a significance level of 10%,
a significance level of 5%, but it has an insignificant
the nationality composition of the executive
association with BTMV. The nationality mix of
directors on the board significantly positively affects
the board’s non-executives has a significant negative
ROA; however, shows insignificant impact on both
association with ROA and Tobin’s Q at 10% and 5%
market-based financial measures. The non-executive
significance level, respectively, but it does have
board members’ mix of nationalities has no
a positive relationship with BTMV at a significance
significant correlation with ROA or Tobin’s Q, but at
level of 5%.
a significant positive correlation with BTMV at a 5%
significance level.

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Table 6. ESG score, corporate governance, and and accounting-based measures. Moreover,
financial performance the female executives and non-executives on board
have revealed insignificant relationships with both
Variable ROA Tobin’s Q BTMV financial performance measures. Furthermore,
Constant 39.9688*** 0.0134*** -1.6171*** the average age of executives on board has
ESG 36431.87*** 15.6473*** 737.9321* an insignificant relationship with ROA. While,
Lev -9.0151*** -0.0029*** 0.2309***
the average non-executives on board are significant
FS -2.437*** -0.0008*** 0.1561***
AgeEX 0.0094 -3.23E-05*** 0.0067*** to both the market-based and accounting-based
AgeNEX 0.0717** 3.96E-05*** -0.0094*** measures. The average executive education level has
F-EX 0.0081 1.32E-06 0.0004 an insignificant association with all financial
F-NEX -0.0112 1.23E-06 -0.0005 performance measures; however, the average
EdEX -0.2906 -8.31E-05*** -0.0189*** non-executive education level is significant with all
EdNEX 0.6654*** 0.0001*** -0.0434** financial performance measures. Board size has
NatEX 1.5244* 0.0006** -0.101
an insignificant effect on ROA; whereas CEO duality
NatNEX -0.8235* -0.0004** 0.1368**
BS 0.054 -1.30E-05* -0.0108***
carries an insignificant relationship with ROA,
CEOD -6.055 8.59E-05 -0.1078 Tobin’s Q and BTMV. Additionally, board
BrdInd 2.9471*** 0.0004** 0.2948*** independence has a significant association with ROA
Note: ***, **, * mean statistically significant at 1%, 5% and and BTMV financial performance measures.
10% level respectively. This paper has some limitations where
the sample of the study includes only emerging
5. CONCLUSION companies rather than developed ones. Furthermore,
this study focuses on the environmental pillars and
It has been shown that all measures of sustainability their sub-indices ignoring the social and governance
with its main ESG score, together with other pillars. Future studies could be done by doing
sub-measures such as carbon dioxide, emission comparative studies between the developed and
score and environmental score pillar are developing countries where the results can add to
significantly positively associated with market-based the knowledge in the area of sustainability.

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