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Sustainable Causal Interpretation with Board Characteristics: Caveat Emptor

Author

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  • Jong-Min Kim

    (Statistics Discipline, University of Minnesota at Morris, Morris, MN 56267, USA)

  • Chulhee Jun

    (Department of Finance, Ziegler College of Business, Bloomsburg University, Bloomsburg, PA 17815, USA)

  • Hope H. Han

    (School of Business Administration, Ulsan National Institute of Science and Technology (UNIST), Ulsan 44919, Korea)

Abstract

The study of a causal interpretation of board and firm characteristics, that is, a hidden dependence relationship on the causal inference among board and firm characteristics, is an important but unaddressed issue in the corporate governance literature. Using diverse advanced statistical methods and focusing on Tobin’s Q, we find that (i) not all board variables previously found to be significant are “robust” to latent variable data analysis, and (ii) those variables that are consistently significant differ markedly in latent structural equation analysis. Our analyses provide researchers interested in board issues with an important caveat: Focusing on the dependence structure of available board variables affected by latent factors may introduce a new horizon in corporate finance.

Suggested Citation

  • Jong-Min Kim & Chulhee Jun & Hope H. Han, 2020. "Sustainable Causal Interpretation with Board Characteristics: Caveat Emptor," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:8:p:3429-:d:348979
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    1. Ovidiu-Constantin Bunget & Dorel Mateș & Alin-Constantin Dumitrescu & Oana Bogdan & Valentin Burcă, 2020. "The Link between Board Structure, Audit, and Performance for Corporate Sustainability," Sustainability, MDPI, vol. 12(20), pages 1-27, October.

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