What Impact Does Corporate Governance Have on Corporate Environmental Performances? An Empirical Study of Italian Listed Firms

In this paper, we first build a multi-theoretical framework through which we hypothesise that the governance mechanisms of a board of directors, on the one hand, and the ownership structures of family and nonfamily firms, on the other, can have an impact on corporate environmental performances. We then test this hypothesis against a sample of 83 Italian listed firms, noting the characteristics of their governance and ownership structures over the five years from 2013 to 2017. We also take note of data from the firms’ Sustainability Reports on emissions of greenhouse gases over the 2014–2018 five-year period. The results we obtain support the prediction, made in line with the Agency-Theory perspective, that there is a positive relationship between board independence and the adoption of environmentally responsible practices. Only partial support emerges for the hypotheses, made in line with the Resource Dependence Theory, according to which better corporate environmental performances can be obtained by increasing the resource provision of board members. In particular, we discover a positive effect of a large-size board on corporate environmental performances, but no significant effect arising from the presence of interlocked board members. Finally, our study provides support for the theoretically-based hypothesis according to which the non-economic utility (socioemotional wealth) of family ownership makes family firms likely to have better environmental performances than non-family firms.