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Corporate social irresponsibility and boards: The implications of legal expertise

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  • Dharwadkar, Ravi
  • Guo, Jun
  • Shi, Linna
  • Yang, Rong

Abstract

In this study, we examine whether Corporate Social Irresponsibility (CSIR) affects the appointment of directors with legal expertise on the board and whether the presence of legal directors has implications for the CSIR-stock return relationship. Using a large sample of publicly traded U.S. firms, we find that firms involved more in CSIR have more directors with legal expertise on the board in subsequent years. Our additional tests suggest that this relationship is not driven by omitted variables or reverse causality. We further find that board legal expertise helps to mitigate the negative stock performance arising from CSIR. Overall, our findings suggest that boards with legal expertise are better able to respond to CSIR and mitigate its damage.

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  • Dharwadkar, Ravi & Guo, Jun & Shi, Linna & Yang, Rong, 2021. "Corporate social irresponsibility and boards: The implications of legal expertise," Journal of Business Research, Elsevier, vol. 125(C), pages 143-154.
    • Handle: RePEc:eee:jbrese:v:125:y:2021:i:c:p:143-154
    DOI: 10.1016/j.jbusres.2020.12.003
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