IDEAS home Printed from https://ideas.repec.org/a/rbs/ijbrss/v11y2022i5p155-175.html
   My bibliography  Save this article

The impact of corporate governance and corporate sustainability on the performance of South African listed companies

Author

Listed:
  • Ajeigbe Kola Benson

    (Department of Accounting, Faculty of Management Sciences, Walter Sisulu University, South Africa)

  • Fortune Ganda

    (Department of Accounting, Faculty of Management Sciences, Walter Sisulu University, South Africa)

Abstract

The study examined corporate governance and corporate sustainability impact on the performance of South African listed companies. Data retrieved from 30 companies for the period 2010-2020 was analysed using panel fully modified ordinary least squares (FMOLS) and dynamic ordinary least square (DOLS) methods. Dependent variables were grouped into the Accounting-based approach and the Market-based approach. Explanatory variables were also grouped into Corporate Governance and Accounting ratios. Findings revealed a strong relationship between corporate governance and company performance. This was substantiated by the result from Board gender diversity, which revealed both positive and negative relationships that were significant under both approaches. Directors’ remuneration revealed a positive but insignificant relationship under both approaches, while Board size revealed a negative relationship under both approaches. Further findings also revealed a strong relationship between corporate sustainability performance and company performance. This was established by the results from the ESG and ROA and ROE, which revealed negative but significant relationships under the first approach and became positive and significant under the second approach. Lastly, a strong relationship between corporate governance and corporate sustainability performance was revealed as shown between ESP and directors’ remuneration and a negative but significant relationship with board size and gender diversity. A cross-country based investigation to ascertain whether the same results can be achieved should be carried out. Key Words:Corporate Sustainability, Corporate Governance, Company Performance CSR, ESG

Suggested Citation

  • Ajeigbe Kola Benson & Fortune Ganda, 2022. "The impact of corporate governance and corporate sustainability on the performance of South African listed companies," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(5), pages 155-175, July.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:5:p:155-175
    DOI: 10.20525/ijrbs.v11i5.1838
    as

    Download full text from publisher

    File URL: https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/1838/1336
    Download Restriction: no
    File URL: https://doi.org/10.20525/ijrbs.v11i5.1838
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijrbs.v11i5.1838?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Taïeb Hafsi & Gokhan Turgut, 2013. "Boardroom Diversity and its Effect on Social Performance: Conceptualization and Empirical Evidence," Journal of Business Ethics, Springer, vol. 112(3), pages 463-479, February.
    2. Nazim Hussain & Ugo Rigoni & Elisa Cavezzali, 2018. "Does it pay to be sustainable? Looking inside the black box of the relationship between sustainability performance and financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1198-1211, November.
    3. Keasey, Kevin & Thompson, Steve & Wright, Mike (ed.), 1997. "Corporate Governance: Economic and Financial Issues," OUP Catalogue, Oxford University Press, number 9780198289913.
    4. Sarra Berraies & Wajdi Ben Rejeb, 2019. "Boards of directors' roles and size: what effects on exploitative and exploratory innovations? Case of listed Tunisian firms," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 23(2), pages 161-179.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    6. Yan‐Leung Cheung & J. Thomas Connelly & Ping Jiang & Piman Limpaphayom, 2011. "Does Corporate Governance Predict Future Performance? Evidence from Hong Kong," Financial Management, Financial Management Association International, vol. 40(1), pages 159-197, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kirsten Burkhardt & Pascal Nguyen & Evelyne Poincelot, 2020. "Agents of change: Women in top management and corporate environmental performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1591-1604, July.
    2. Gerard Farias & Christine Farias & Isabella Krysa & Joel Harmon, 2020. "Sustainability Mindsets for Strategic Management: Lifting the Yoke of the Neo-Classical Economic Perspective," Sustainability, MDPI, vol. 12(17), pages 1-14, August.
    3. Maria-Teresa Marchica, "undated". "Debt Maturity and the Characteristics of Ownership Structure: An Empirical Investigation of UK Firms," Discussion Papers 05/29, Department of Economics, University of York.
    4. Dang, Rey & Houanti, L'Hocine & Sahut, Jean-Michel & Simioni, Michel, 2021. "Do women on corporate boards influence corporate social performance? A control function approach," Finance Research Letters, Elsevier, vol. 39(C).
    5. Talavera, Oleksandr & Yin, Shuxing & Zhang, Mao, 2016. "Managing the diversity: board age diversity, directors’ personal values, and bank performance," MPRA Paper 71927, University Library of Munich, Germany.
    6. Shoukat Ali & Ramiz Ur Rehman & Muhammad Ishfaq Ahmad & Joe Ueng, 2021. "Does Board Diversity Attract Foreign Institutional Ownership? Insights from the Chinese Equity Market," JRFM, MDPI, vol. 14(11), pages 1-15, October.
    7. Short, Helen & Keasey, Kevin, 1999. "Managerial ownership and the performance of firms: Evidence from the UK," Journal of Corporate Finance, Elsevier, vol. 5(1), pages 79-101, March.
    8. Abdallah, Abed Al-Nasser & Ismail, Ahmad K., 2017. "Corporate governance practices, ownership structure, and corporate performance in the GCC countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 98-115.
    9. Iqbal, Zamir & Mirakhor, Abbas, 2004. "Stakeholders Model Of Governance In Islamic Economic System," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 11, pages 44-63.
    10. Michail Nerantzidis, 2018. "The role of weighting in corporate governance ratings," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(3), pages 589-628, September.
    11. C. José García Martín & Begoña Herrero, 2020. "Do board characteristics affect environmental performance? A study of EU firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 74-94, January.
    12. Tobias Gerwing & Peter Kajüter & Maximilian Wirth, 2022. "The role of sustainable corporate governance in mandatory sustainability reporting quality," Journal of Business Economics, Springer, vol. 92(3), pages 517-555, April.
    13. Ajab Khan & H. Kent Baker, 2022. "How board diversity and ownership structure shape sustainable corporate performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3751-3770, December.
    14. García, C. José & Herrero, Begoña, 2022. "Corporate entrepreneurship and governance: Mergers and acquisitions in Europe," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    15. Young Kyun Chang & Won-Yong Oh & Jee Hyun Park & Myoung Gyun Jang, 2017. "Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea," Journal of Business Ethics, Springer, vol. 140(2), pages 225-242, January.
    16. Suzette Viviers & Nadia Mans-Kemp, 2019. "Director overboardedness in South Africa: evaluating the experience and busyness hypotheses," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 16(1), pages 68-81, March.
    17. Marwan Mansour & Hamzeh Al Amosh & Ahmad Yuosef Alodat & Saleh F. A. Khatib & Mohammed W. A. Saleh, 2022. "The Relationship between Corporate Governance Quality and Firm Performance: The Moderating Role of Capital Structure," Sustainability, MDPI, vol. 14(17), pages 1-25, August.
    18. ATM Adnan & Hilda Tandigalla, 2017. "The Dramatic Shift In Emphasis From A Shareholder-Dominated Approach To A Stakeholder-Oriented Corporate Governance Model," European Journal of Business and Economics, Central Bohemia University, vol. 12(2), pages 11151:12-11, January.
    19. Connelly, J. Thomas & Limpaphayom, Piman & Nagarajan, Nandu J., 2012. "Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1722-1743.
    20. Elena Merino & Montserrat Manzaneque & Yolanda Ramírez, 2019. "Value-added distribution to stakeholder of Spanish listed companies: a corporate governance perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(3), pages 577-604, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijbrss:v:11:y:2022:i:5:p:155-175. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.