The relationship among board of director characteristics, corporate social performance and corporate financial performance

Abstract

Purpose

The purpose of this paper is to investigate the link between qualitative measures of a firm's Board of Directors and its corporate social performance (CSP).

Design/methodology/approach

CSP is a function of qualitative measures of a firm's Board of Directors, as well as firm risk and financial performance. A longitudinal sample of 104 Canadian firms is used.

Findings

Board independence is positively related to social performance but shareholder orientation is not. In addition, a positive relationship between social performance with both financial performance and debt is found.

Research limitations/implications

Although the sample is small and restricted to Canadian firms, the results are quite robust. Future studies should consider using qualitative measures on a larger international sample of firms.

Originality/value

This paper uses qualitative measures – the degree of independence of the Board and the Board's level of shareholder orientation – to examine the interrelationship between a firm's Board of Directors and its CSP.

Citation

Dunn, P. and Sainty, B. (2009), "The relationship among board of director characteristics, corporate social performance and corporate financial performance", International Journal of Managerial Finance, Vol. 5 No. 4, pp. 407-423. https://doi.org/10.1108/17439130910987558