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In recent years, European banks have been required to integrate environmental and social objectives into their business practices. At the same time, they have become increasingly exposed to environmental, social and governance (ESG) controversies. This paper empirically examines the relationship between the board characteristics of banks (i.e. size, gender diversity, meeting frequency, sustainability compensation incentives and the presence of a sustainability committee) and exposure to ESG-related controversies.

The empirical analysis focuses on a sample of 61 European banks between 2012 and 2021. Employing generalized method of moments (GMM) estimation, the authors examine the relationship between board characteristics and ESG controversies.

The results of the study indicate that banks featuring certain board characteristics (i.e. larger and more gender-diverse boards, facing sustainability compensation provisions and having sustainability committees) experience lesser exposure to ESG controversies. Additionally, the authors ascertain that prior instances of ESG controversies play a role in influencing current levels of such controversies. This result highlights the relevance of a bank's historical trajectory.

The authors' sample contains banks based in the European Union (EU). Future research should broaden the analysis to encompass banks operating in other advanced countries, as well as in emerging countries. This expansion would offer more insights into the relationship between board characteristics and ESG controversies under different regulatory frameworks.

The authors' findings provide relevant implications for several stakeholders, including shareholders, regulators and supervisors. Certain board characteristics should be taken into consideration to limit exposure to ESG controversies.

To the best of the authors' knowledge, this paper represents the first attempt to provide evidence of the link between strong corporate governance standards and reduced exposure to ESG controversies.

The purpose of this study is to develop a method to assess social performance. Traditionally, environment, social and governance (ESG) rating providers use subjectively weighted arithmetic averages to combine a set of social performance (SP) indicators into one single rating. To overcome this problem, this study investigates the preconditions for a new methodology for rating the SP component of the ESG by applying machine learning (ML) and artificial intelligence (AI) anchored to social controversies.

This study proposes the use of a data-driven rating methodology that derives the relative importance of SP features from their contribution to the prediction of social controversies. The authors use the proposed methodology to solve the weighting problem with overall ESG ratings and further investigate whether prediction is possible.

The authors find that ML models are able to predict controversies with high predictive performance and validity. The findings indicate that the weighting problem with the ESG ratings can be addressed with a data-driven approach. The decisive prerequisite, however, for the proposed rating methodology is that social controversies are predicted by a broad set of SP indicators. The results also suggest that predictively valid ratings can be developed with this ML-based AI method.

This study offers practical solutions to ESG rating problems that have implications for investors, ESG raters and socially responsible investments.

The proposed ML-based AI method can help to achieve better ESG ratings, which will in turn help to improve SP, which has implications for organizations and societies through sustainable development.

To the best of the authors’ knowledge, this research is one of the first studies that offers a unique method to address the ESG rating problem and improve sustainability by focusing on SP indicators.

This study aims to investigate the relationship between board gender diversity and environmental, social and governance (ESG) controversies and to determine if a critical mass of female directors has a significant impact on ESG performance.

The study analyzes a sample of non-financial companies from 13 European countries between 2004 and 2021. The primary method used to reach conclusions was the pooled ordinary least squares regression. Additionally, the study used supplementary techniques such as alternative measurement, sub-sample analysis and two-stage least squares to enhance its reliability.

The results indicate that a higher representation of women on boards is correlated with a reduction in the number of ESG controversies, particularly when there are three or more female directors. Furthermore, the relationship between board gender diversity and ESG controversies may be affected by factors such as industry, governance and a company’s environmental performance.

This study suggests that increasing women’s representation on boards may mitigate ESG controversies and improve firm reputation and performance, especially in industries with high ESG risks. Policymakers can support this through policies, targets, training and inclusive practices. The findings also inform investors and stakeholders of the relationship between board gender diversity and ESG controversies.

This study expands the understanding of the relationship between board gender diversity and sustainable accounting and finance. It focuses on the effect that having female board members has on corporate policies, which is significant for shaping global policies that promote diversity on boards.

This paper aims to investigate the effect of environmental, social and governance (ESG) controversies on the cost of equity (COE) capital, exploring the moderating role of both positive ESG performance and market securities regulation.

This paper adopts a sample of 2,599 time observations related to European listed companies for which the authors examine a set of 30 negative ESG scores across the three pillars in terms of controversies, compliance and other negative issues. This study uses the average of seven implied COE estimates.

The results show that negative ESG performance, particularly environmental controversies, increases the COE, although this impact is mitigated when associated with company efforts to improve environmental performance. Besides, environmental controversies are likely to increase the COE in countries where the market regulation is stronger, as a consequence of higher investors’ expectations towards the scrutiny role of more efficient markets against companies’ controversies.

Companies should take care seriously of environmental issues such as biodiversity, product impact and resource impact, because investors do react accordingly. As despite no direct effects of positive ESG performance are observed in terms of COE reduction, the mitigating role on the ESG controversies–COE relationship makes ESG practices still significant for European investors.

The effects of ESG performance on company financial performance should be investigated under the assumption that bad events weight more than positive ESG performance.

Because no prior studies have specifically assessed the effect of the European listed companies’ ESG controversies on their COE, this paper delivers insights into the relationship between positive and negative ESG performance and their effects on capital market financing.

The purpose of this paper is to develop the concept of managerial controversy. This concept focusses on organizational disagreements in order to understand the emergence of organization, and also postulates that researchers can better understand organizational phenomena through the ruptures that occur in an organization's everyday activities.

While the concept of controversy was initially developed to understand the emergence of outputs, this paper develops the concept of managerial controversy in order to understand the emergence of ways of working.

The concept of managerial controversy demonstrates that the authors can improve the understanding of organization by focussing on the disagreements, the associations of heterogeneous elements, the mediators, and the traces left by actors, as well as by considering the viewpoints of these actors.

The concept of managerial controversy can be used as a framework for describing the development of organization over time. This concept is suitable for management and organization scholars interested by issues related to organization and organizing.

This paper offers an analytical framework for analyzing the emergence of organizational features from ruptures. Furthermore, the concept of managerial controversy extends to not only the literature of actor-network theory, but also to the literature related to organizing.

This study aims to examine how religiosity influences brand loyalty toward religiously positioned brands (Chick-fil-A, Forever 21, etc.) when these brands engage in morally controversial actions.

Study 1 investigates how religiosity affects brand loyalty when religiously positioned brands engage in religiousness-related vs nonreligiousness-related morally controversial actions. Study 2 examines several psychological processes (reactance, forgiveness and moral decoupling) as mediators of the effects of intrinsic religiosity and extrinsic religiosity on brand loyalty for controversial religious brands.

Study 1 demonstrates that religiosity leads to positive brand loyalty for religiously positioned brands in the case of both religiousness-related and nonreligiousness-related controversies. Study 2 reveals that intrinsic religiosity (extrinsic religiosity) leads to brand loyalty through moral decoupling and forgiveness, but not through reactance, when religious brands engage in religiousness-related (nonreligiousness-related) controversies.

This research focuses on the effects of religiosity on brand loyalty for morally controversial religious brands but does not examine the effects of religious affiliation (Christianity, Islam, Hinduism, etc.). The samples include only US residents.

Religious positioning of brands can engender brand loyalty for consumers with high levels of intrinsic religiosity and/or extrinsic religiosity, even when these brands engage in morally controversial actions.

This research shows that religiosity affects brand loyalty for morally controversial religious brands and demonstrates that psychological processes used by consumers to justify support for morally controversial religious brands depend on type of religiosity (intrinsic vs extrinsic) and type of controversy (religiousness-related and nonreligiousness-related).

How can governments and survivors prepare for and manage natural disasters? Post-disaster reconstruction researchers advocate that community involvement is needed to help survivors recover effectively. This study aims to propose that cooperative goals between government officials and survivors develop guanxi relationships and constructive controversy wherein survivors voice their opinions to aid disaster recovery.

The authors adopted the critical incident technique (CIT), which has proved especially useful for studying complex issues, as well as site-intensive research for interviews and participant observation. After developing a local reputation and rapport by working in a residential resettlement area for two months, an author used the CIT to ask 118 survivors of the 2008 Sichuan earthquake to describe specific incidents when they interacted with government officials about recovery issues and then to rate survey items that measure independent and dependent variables.

Results, including structural equation analyses, support the reasoning that cooperative goals between government and survivors facilitate guanxi and constructive controversy, which in turn produced effective disaster recovery, as indicated by survivors’ social support, satisfaction, reduced stress and beliefs that government officials led effectively.

The data are self-reported and subject to biases and may not be accurate.

In addition to developing theoretical understanding, the results can have important practical implications for strengthening relationships and constructive controversy between government and survivors.

Results suggest that communities have practical ways to prepare for disasters. Structuring cooperative goals among survivors, encouraging guanxi relationships, and training in constructive controversy should promote effective recovery from natural disasters.

The paper develops theory and research on how leaders can promote community involvement for effective disaster management. The paper proposes that high-quality interpersonal relationships, also referred to guanxi, and the open-minded discussion of opposing ideas, labeled constructive controversy, are major components of effective community involvement. The paper adds to the literature by empirically documenting the utility of the Western-developed theory of cooperation and competition and the concept of constructive controversy for understanding the effectiveness of government leadership for disaster recovery in China.

The purpose of this paper is to present the state-of-the-art in empirical research on constructive controversy in the context of business organizations and to outline strategic implications both for research and practical application.

Literature search on constructive controversy in relevant databases identified 33 empirical publications from 1980 to 2009. The paper analyzes and summarizes characteristics of the studies, methodological approaches, and empirical findings.

The literature review reveals that most studies are conducted in the industrial and service sector. Authors mostly apply a quantitative approach using interviews, experiments, and surveys. Empirical findings show that constructive controversy supports decision making, learning, interpersonal relationships, and productivity. In most cases goal interdependence is taken as independent variable.

There is a need for further consolidating the findings either by experimental verification or by field studies. A processual and longitudinal approach should be emphasized and the methodical repertory should be expanded by applying qualitative methods like observation. There is a need for expanding the scope of constructs and analyzing post-modern collaboration forms. Linking controversy to organizational processes like organizational learning would lead to a deeper understanding of innovation processes in organizations.

The implementation of the controversy procedure can support organizational processes like decision making, problem solving, learning, and innovation. This offers opportunities to expand the research field.

This article provides a systematic review on constructive controversy in the business context for the first time.

The purpose of this study is to examine the extent to which a cause-brand alliance (CBA) leads to improved attitude toward cause-brand alliance, which in turn leads to improved brand identification.

The approach uses a 2 × 2 × 2 between-subjects experimental design to examine the interaction effect of the brand ally, the non-profit ally, and the perception of cause controversy on a customer’s attitude toward the CBA, which in turn affects identification with the brand ally.

On average, customers’ perception of cause controversy influences attitude toward the CBA and subsequently the level of identification with the brand ally. When a non-profit organization is connected to a controversial issue, managerial options for building a successful CBA are more limited than when the non-profit is noncontroversial.

We contribute to consumer learning theory in the context of CBA research by identifying an important boundary condition – perceived cause controversy. Perceived cause controversy impedes the customer’s learning about partners in CBA. Moreover, fit and cue consistency are separate constructs.

CBAs help build customer brand identification. Brand managers must include the customer’s perceived cause controversy, the ally’s unique information, and the customer’s attitude toward the nonprofit in the decision calculus. Brands have an opportunity to demonstrate corporate social responsibility and build identification by helping a less well-established nonprofit to build positive customer attitudes. If the non-profit is linked to controversy, this opportunity is constrained.

A boundary condition-perceived cause controversy influences how the partners in a CBA differentially influence the customer’s attitude toward the CBA and, ultimately, brand identification.

Gender diversity in corporate boards is broadly studied in existing corporate governance literature. However, the role of board gender diversity on environmental, social and governance (ESG) performance of the banks is still unaccounted for. Drawing on resource dependence and legitimacy theory, this study addresses this pressing research issue. Moreover, investigation of ESG controversies as a moderator paves the existing corporate governance research to the new avenues.

Data were sourced from Refinitiv database on 37 US banks from the period of 2013 to 2017. This study employs static and dynamic panel regression models that include random effects, fixed effects and dynamic generalised method of moments (GMMs) to test the hypotheses. Furthermore, system GMM is used to reduce the issue of endogeneity, measurement error, omitted variables bias and bank-specific heterogeneity.

We identify a significant positive relationship between board gender diversity and the ESG performance of US banks. However, the result propounds non-significant moderating effect of ESG controversies on the board gender diversity–ESG performance nexus.

Literature on board gender diversity and ESG separately and predominantly explains firm/bank's financial performance. This study is one of the pioneering attempts to explain the role of board gender diversity on ESG performance. Although incremental, however, this study also contributes to the literature on ESG in the US context.