1 s2.0 S0959652623017110 Main

Journal of Cleaner Production 414 (2023) 137553
Contents lists available at ScienceDirect
Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro
Experts on boards audit committee and sustainability performance: The

role of gender
Sally Mingle Yorke a, Augustine Donkor b, *, Kwadjo Appiagyei c
a
Hong Kong Polytechnic University, College of Professional and Continuing Education, Hong Kong
b
Sheridan Institute of Higher Education, School of Business, Perth, Western Australia, Australia
c
Kwame Nkrumah University of Science and Technology, School of Business, Kumasi, Ghana
A R T I C L E I N F O A B S T R A C T
Handling Editor: Jian Zuo This paper examines and compares the role of male financial experts (MFEs) and female financial experts (FFEs)
of the Audit Committee (AC), on sustainability performance using a sample of listed firms in the United States
JEL classification: from 2010 to 2021. The results show that although both MFEs and FFEs influence sustainability performance,
B54 FFEs have statistically greater influence than MFEs. The results also show that FFEs have greater influence across
J16
all three pillars of Environmental, Social and Governance (ESG) performance. Further analyses suggest that if an
M49
AC has single-gender financial expertise (only MFEs or only FFEs), this is detrimental to the firm’s sustainability
Q56
performance. The results also show that although having a gender-diverse AC is beneficial, the benefit is greater
Keywords:
if the females on the AC are financial experts. These results may partly explain the inconclusive findings of earlier
Financial experts
Gender studies on the influence of financial expertise on sustainability performance. The results remain consistent under
Audit committee a battery of robustness tests. Overall, the study highlights the need for ACs to have diverse financial experts from
Sustainability performance the perspective of non-financial reporting and adds to justifications for increasing calls for diversity on boards.
Diversity
1. Introduction 2018). However, studies on the relationship between AC members’

financial expertise and non-financial disclosure have been inconclusive
The audit committee (AC) is an essential component of a good (Al-Shaer and Zaman, 2018; Buallay and Al-Ajmi, 2020; Li et al., 2012;
corporate governance framework (Buallay and Al-Ajmi, 2020; Dwekat Mohammadi et al., 2020; Pozzoli et al., 2022). Additionally, these
et al., 2020), with the traditional role of an AC predominantly focused studies do not distinguish between the performance of an AC’s financial
on financial reporting. However, ACs in modern corporations are experts based on their gender. Meanwhile, there are increasing calls for
becoming increasingly concerned about the risk of misleading stake more studies on the gender of financial experts on ACs (Abbasi et al.,
holders, and have thus extended their remit to the oversight of sus 2020) due to certain unique skills and competencies attributable to each
tainability information (Al-Shaer and Zaman, 2018; Dwekat et al., 2020; gender (Gull et al., 2018).
Pozzoli et al., 2022). The unique individual attributes and competencies This study responds to these calls and contributes to the published
of AC members affect the effectiveness of the committee (Al-Shaer and literature by empirically providing evidence of the influence of AC
Zaman, 2018). Financial experts on an AC are an important attribute financial experts on firms’ sustainability performance based on their
that contributes significantly to the effectiveness of the committee gender. Specifically, our analyses distinguish between female financial
(Miglani and Ahmed, 2019). Agency theory postulates that firms experts (FFEs) and male financial experts (MFEs) on ACs. Our analyses
appoint financial experts to their AC to improve monitoring and over also examine whether there is a significant difference in the influence of
sight (Pozzoli et al., 2022). As the remit of the AC has expanded to FFEs and MFEs of ACs on firms’ sustainability performance and their
encompass non-financial reporting, the presence of financial experts on sustainability focus (ESG [i.e., individual ESG pillars]). We were moti
an AC suggests that the level of clarity and reliability of firm sustain vated to focus on the gender of financial experts for several reasons.
ability will improve (Buallay and Al-Ajmi, 2020) as the committee’s First, the concept of gender socialisation suggests significant differences
level of monitoring and oversight is also improved (Al-Shaer and Zaman, in values, attitudes, and behaviours of males and females because of
* Corresponding author.
E-mail addresses: [email protected] (S.M. Yorke), [email protected] (A. Donkor), [email protected] (K. Appiagyei).
https://doi.org/10.1016/j.jclepro.2023.137553
Received 28 December 2022; Received in revised form 17 May 2023; Accepted 22 May 2023
Available online 2 June 2023
0959-6526/© 2023 Elsevier Ltd. All rights reserved.
S.M. Yorke et al. Journal of Cleaner Production 414 (2023) 137553
their socialisation (Hoominfar, 2019; Ridgeway and Correll, 2004). Cadbury Report,1 the Smith Report,2 and the Sarbanes Oxley Act,3
Females on boards are hence considered to present different knowledge, which were aimed at reducing the reoccurrence of corporate failures
skills, perspectives, and abilities (Miller & del Carmen Triana, 2009; (Alhababsah and Yekini, 2021). Thus, the AC is considered an essential
Nielsen and Huse, 2010). The unique attributes of females make them aspect of every good corporate governance framework (Buallay and
significant contributors to effective decision-making (Lopatta et al., Al-Ajmi, 2020; Cohen et al., 2004; Dwekat et al., 2020). Moreover, the
2020; Zalata et al., 2018). On the issue of sustainability, it has been AC remains a conduit for the exercise of the board’s oversight of man
suggested that female personality traits make females more concerned agement policies and practices (Chahine and Filatotchev, 2011;
about sustainability than males (Nadeem et al., 2017; Oradi and Mohammadi et al., 2020). In recent times, the remit of the AC now ex
E-Vahdati, 2021). Moreover, according to resource dependence theory, tends beyond financial reporting to encompass monitoring and oversight
“gender-diverse boards are highly advantageous not only for ethical of non-financial reporting because the AC seeks to address any risk of
reasons but also for maintaining a good relationship with the external firms misleading stakeholders (Al-Shaer and Zaman, 2018; Pozzoli et al.,
environment to acquire resources” (Nadeem et al., 2017; Oradi and 2022; Trotman and Trotman, 2015). Although the corporate governance
E-Vahdati, 2021, p. 278). Therefore, diversity on an AC can lead to and sustainability performance nexus has been extensively studied,
increased transparency and disclosure of sustainability information research on the influence of AC on sustainability performance remains
(Pitenoei et al., 2022). However, research considering the gender of scant (Dwekat et al., 2020; Pozzoli et al., 2022). Previous studies have
financial experts on ACs has focused on issues related to earnings affirmed that ACs enhance firms’ non-financial disclosures (i.e., sus
management (Zalata et al., 2018), audit quality (Abbasi et al., 2020), tainability reporting) (Al-Shaer and Zaman, 2018; Dwekat et al., 2020;
and internal control weakness (ICW) (Oradi and E-Vahdati, 2021). Pozzoli et al., 2022). The effectiveness of the committee is affected by
Despite the growing literature on the gender of financial experts on ACs, the unique individual attributes and competencies of AC members
there is limited evidence of its influence on corporate sustainability (Al-Shaer and Zaman, 2018). Thus, there is increasing research interest
practices. in the role of AC characteristics on corporate social responsibility (CSR)
Given that there are established differences between males and fe and sustainability performance (see Al-Shaer and Zaman, 2018; Dwekat
males, we expected the influence of MFEs and FFEs on sustainability et al., 2020; Pozzoli et al., 2022; Trotman and Trotman, 2015). A key
performance and practices to differ. We empirically tested our predic characteristic of the AC that influences its effectiveness is the presence of
tion by relying on a sample of listed firms in the United States from 2010 financial experts (Miglani and Ahmed, 2019). Financial experts enhance
to 2021. Our findings suggest that although both MFEs and FFEs on an the monitoring role expected of the committee. Knowledge of financial
AC have an influence on a firm’s sustainability performance, significant and accounting matters means that financial experts can understand the
differences exist, with females exerting a greater influence. We also complexities of the financial reporting process (Dhaliwal et al., 2010)
found significant differences in the focus of MFEs and FFEs on an AC in and reduce reliance on the judgement of auditors (Buallay and Al-Ajmi,
terms of the three ESG pillars – Environmental, Social, and Governance. 2020). This increases their ability to detect problems and improve
We found that MFEs did not influence the social pillar, while FFEs financial reporting (Bédard and Gendron, 2010; Pucheta-Martínez et al.,
exerted greater influence on all three pillars compared with their male 2021). Additionally, financial experts on the AC contribute significantly
counterparts. Overall, the results suggest that FFEs have more influence to the establishment of robust internal controls and risk management
on sustainability compared with MFEs. This influence extends beyond strategies (Oradi and E-Vahdati, 2021; Shaukat et al., 2016).
the mere inclusion of females (i.e. adding females without financial However, little is known about the influence of financial experts on
expertise) on the AC. We conducted several additional tests to assess the the AC and sustainability performance, and the few available studies on
robustness of our results. the influence of financial experts on AC and sustainability performance
Our study contributes to the published literature in two ways. First, it have been inconclusive (Al-Shaer and Zaman, 2018; Miglani and
extends the literature on the influence of financial expert gender in Ahmed, 2019; Pozzoli et al., 2022). For instance, Pozzoli et al. (2022)
corporate reporting (Abbasi et al., 2020; Oradi and E-Vahdati, 2021; found sustainability performance to be positively and significantly
Zalata et al., 2018) by focusing on the influence of financial expert associated with financial expertise on the AC. Similarly, Al-Shaer and
gender on non-financial reporting. Second, by ascertaining that FFEs Zaman (2018) found that the credibility of firm sustainability reporting
have more influence on sustainability performance compared with was improved by financial expertise on the AC. Contrary to the above
MFEs, our results suggest that the positive relationship between finan empirical findings, financial expertise on the AC has been found to be
cial experts and sustainability as established by previous research may negatively associated with sustainability reporting (Buallay and
be driven by FFEs. Consequently, our results highlight that differences in Al-Ajmi, 2020), and intellectual capital disclosures (Li et al., 2012).
gender consideration across different studies may have contributed to This study sought to add to this stream of literature by identifying an
the inconclusive findings in the published literature. attribute of AC financial expert (i.e., gender) which could provide a
Practically, our findings should be of interest to firms seeking to plausible explanation for the inconclusive findings.
significantly improve their sustainability performance. Such firms
should consider increasing the number or proportion of FFEs on their
2.2. Gender diversity on the board and board committees
ACs. In addition, regulators, and advocates for diversity on boards and
committees, are informed of the role that FFEs on an AC can play to
Board gender diversity is another important dimension of effective
advance sustainability performance.
corporate governance that continues to attract the attention of regula
tors, practitioners, and academics (Adams, 2016; Gabaldon et al., 2016;
2. Literature review and hypothesis development
Nadeem, 2020). According to the concept of gender socialisation, males
and females possess significant differences in values, attitudes, and be
2.1. Audit committee and financial expertise
haviours due to their socialisation (Hoominfar, 2019; Ridgeway and
The committees of a firm’s board offer support to the board in per

forming its dual roles of monitoring and advising the management (Kim, 1
Cadbury (1992). Cadbury report: The financial aspects of corporate
2022; Ramos et al., 2022). Thus, the board can exercise its duties effi governance. HMG, London.
ciently by delegating responsibilities to its committees (Koh et al., 2
Smith (2003). Audit Committees: Combined Code Guidance. London:
2007). The principal committee of a board, which has increasingly Financial Reporting Council.
grown in importance, is the AC (Al-Shaer and Zaman, 2018). The AC’s 3
Sarbanes-Oxley Act (2002). In The Public Company Accounting Reform and
prominence is observed by its inclusion in regulations such as the Investor Protection Act. Washington DC: US Congress.
2
Correll, 2004). The different attributes of females are considered firm sustainability information has become a concern (Al-Shaer and
essential for quality decision-making on the board (Lopatta et al., 2020; Zaman, 2018). Consequently, the monitoring and oversight roles of the
Zalata et al., 2018). As a result, stakeholders are increasingly demanding AC now extend to sustainability information of the firm (Al-Shaer and
that firms increase female involvement on their boards (Nadeem, 2020). Zaman, 2018; Dwekat et al., 2020; Pozzoli et al., 2022; Trotman and
The published literature suggests that certain attributes of females make Trotman, 2015). This is because the AC is concerned about any risk of
them better supervisors and monitors because they are more risk-averse, misleading stakeholders, hence the need to protect the credibility of
more conservative, and therefore more responsible (Oradi and E-Vah both financial and non-financial reports (Al-Shaer and Zaman, 2018). As
dati, 2021). Diversity on the board leads to an increase in the quality of the level of monitoring and oversight of the AC is improved in the
information available to the board because of the different knowledge, presence of financial experts (Al-Shaer and Zaman, 2018), it is expected
skills, perspectives, and abilities of the individual members (Miller & del that their presence will equally improve the clarity and reliability of firm
Carmen Triana, 2009; Nielsen and Huse, 2010). A heterogeneous board sustainability reporting (Buallay and Al-Ajmi, 2020). Besides perform
is therefore considered to perform better in periods of uncertainty ing monitoring and oversight role, the board performs advisory roles,
(Nielsen and Huse, 2010). The contribution of a board’s diversity to its and the expertise of the financial experts on the board is crucial for
performance and efficiency is also reflected in the composition of its business strategies and corporate policy appraisal, allocation of corpo
committees and sub-committees. Thus, females on committees of the rate resources and management of business risk (Custódio and Metzger,
board can enhance the effectiveness of those committees (Miglani and 2014). Thus, the presence of financial experts on the board is expected to
Ahmed, 2019). improve both financial and non-financial outcomes including sustain
Regarding AC, published literature affirms that gender-diverse ACs ability performance (Kim and Starks, 2016).
are more effective (Aldamen et al., 2018; Miglani and Ahmed, 2019) and According to the resource dependence theory, firms survive in their
improve the transparency of non-financial information (Appuhami and operating environment by acquiring and controlling essential resources
Tashakor, 2017; Pitenoei et al., 2022). Previous studies on the gender of (Terjesen et al., 2009). The control of these essential resources can be
financial experts on ACs suggest that female financial experts have in achieved by developing internal resources that facilitate access to
fluence on earnings management (Zalata et al., 2018), audit quality essential external resources (Pfeffer and Salancik, 1978). The board has
(Abbasi et al., 2020), and internal control weakness (ICW) (Oradi and been identified as a source of valuable internal resources that facilitates
E-Vahdati, 2021). Despite the growing literature on the gender of the acquisition of external resources to achieve strategic objectives (Lu
financial experts on ACs, there is limited evidence of its influence on and Herremans, 2019). The characteristics of board members such as
corporate sustainability practices. Meanwhile, studies considering the expertise, knowledge, skills, and values are important attributes that
influence of financial experts on AC and sustainability performance do help firms to exert influence and gain control of external resources for
not specifically consider the role of gender although there are increasing strategic purposes (Lu and Herremans, 2019; Pfeffer and Salancik,
calls for more studies on the gender of financial experts on ACs (Abbasi 1978). According to the concept of gender socialisation, there are sig
et al., 2020). We sought to fill this gap by distinguishing between female nificant differences in values, attitudes, and behaviours of males and
financial experts (FFEs) and male financial experts (MFEs) influence on females due to differences in their socialisation (Hoominfar, 2019;
sustainability performance. While financial experts on the AC improve Ridgeway and Correll, 2004). For instance, females possess values, at
the effectiveness of the committee’s monitoring and oversight of man titudes and traits that make them more risk averse (Oradi and E-Vahdati,
agement policies and practices including sustainability performance 2021) and demonstrate more care for life in society (Liao et al., 2015).
(Al-Shaer and Zaman, 2018; Pozzoli et al., 2022), the gender of the Thus, it is expected that gender diversity on boards will bring different
financial experts may also influence the ability of the AC to improve knowledge, skills, perspectives, and abilities which can enrich the
sustainability practices, especially when female traits are considered quality of board decision-making and board performance (Miller & del
more valuable in addressing sustainability issues (Kim and Starks, Carmen Triana, 2009; Nielsen and Huse, 2010) as well as the effec
2016). tiveness of the board’s committees, including the AC (Miglani and
Ahmed, 2019).
2.3. Hypothesis development The difference in personality traits between male and female di
rectors may be useful for addressing sustainability issues in firms’
According to the agency theory, the separation of ownership and environment that are essential for business survival (Kim and Starks,
control leads to agency problems as shareholders and managers pursue 2016). Female directors are more risk-averse, more conservative, and
different interests (An et al., 2011). Shareholders mitigate agency therefore more responsible (Oradi and E-Vahdati, 2021), making them
problems and promote interest congruence by using effective gover better supervisors and monitors. Prior studies have established that the
nance mechanisms to monitor the behaviour of managers (Angela Liu personality traits of female directors make them more concerned than
et al., 2015; Cerbioni and Parbonetti, 2007). Thus, an effective board males regarding issues of sustainability (e.g., Cabral and Sasidharan,
through the audit committee provides appropriate monitoring and 2021; Donkor et al., 2021a; Kahreh et al., 2013; Liao et al., 2015;
oversight of management policies and practices (Mohammadi et al., Nadeem et al., 2017; Oradi and E-Vahdati, 2021). While male directors
2020). Agency theory postulates that the presence of financial experts on focus on financial performance, female directors are more interested in
the AC influences the effectiveness of the committee (Miglani and environmental and social responsibility (Ibrahim and Angelidis, 1994;
Ahmed, 2019) by improving the monitoring and oversight of manage Liao et al., 2015). Therefore, resource dependence theory suggests that
ment policies and practice (Al-Shaer and Zaman, 2018; Pozzoli et al., gender diversity on the board and its committees is a valuable internal
2022). resource that facilitates the achievement of the firm’s strategic
Traditionally, the AC has been concerned with monitoring activities objectives.
related to mandatory financial reporting and disclosure (Dwekat et al., Following the agency theory, we argue that the inclusion of financial
2020). This has, however, evolved to include oversight of non-financial experts on the AC is essential in improving sustainability performance.
disclosures (Al-Shaer and Zaman, 2018; Trotman and Trotman, 2015), In addition, we follow the resource dependence theory to argue that the
especially following numerous corporate failures (Kolk and Pinkse, difference in values, attitudes, and behaviours of males and females can
2010), which has increased stakeholder interest in non-financial infor be considered an important source of resources for firm growth and
mation (Bernardi, 2020; Velte and Stawinoga, 2017). The narrative survival if gender diversity on the board and its committees are pursued
nature of sustainability disclosures and their potential benefits to firms (Donkor et al., 2021a; Kim and Starks, 2016; Nadeem, 2020). Given that
make them a potential tool for stakeholder impression management males and females have different personality traits and females on the
(Beske et al., 2020; Ioannou and Serafeim, 2017). Thus, the credibility of board and sub-committees ensure the discussion of issues that may not
3
be of interest to males (Gul et al., 2011), as well as females possessing 3.2. Model specification
traits that are more valuable for addressing sustainability issues, we
expect the influence of males and females on sustainability issues to To address the objectives of the study, the following ordinary least
differ. squares regression models were adopted in line with Pozzoli et al.
Empirical studies have found a significant positive association be (2022). Model 1 assessed the effect of female and male AC experts on
tween gender diversity on an AC and sustainability performance (e.g., sustainability performance (i.e., Hypotheses 1), while Model 2 assessed
Appuhami and Tashakor, 2017; Pitenoei et al., 2022). However, these the differences in the focus of both female and male AC experts on the
studies did not focus on the financial expertise of females on the AC. On individual sustainability (ESG) pillars (i.e., Hypotheses 3). To test Hy
the other hand, studies that have considered the gender of financial pothesis 2, the differences in the coefficients in Model 1 for FFEs and
experts have focused on the quality of financial reporting (Oradi and MFEs on the AC were tested.
E-Vahdati, 2021). In the present study, we extended these streams of
ESG scoreit = b0 + b1 ACFFEit + b2 ACMFEit + b3 ACNEDit + b4 AC tenureit
literature by exploring the role of gender in the association between AC
financial experts and sustainability performance. Thus, following + b5 Boardsizeit + b6 ESGCOMit + b7 Firmageit + B8 Big4it + b9 Cashholdit
agency theory and resource dependence theory, we formulated the + b10 SGROWit + b11 Firmsizeit + B12 BMTit + b13 DEBTit + b14 ROEit
following hypotheses to test the role of gender on the influence of AC
+ B15 RnDit + b16 Inventoryit + B17 Litigationit + B18 Disaccrualit
financial experts on firm sustainability performance: ∑ ∑ ∑
+ indutsryD + yeardD + FirmD + εit
H1. Male and female financial experts on the audit committee influ
(1)
ence firm sustainability performance.
H2. There is significant difference in the contribution of AC male and ESG pillarsit = b0 + b1 ACFFEit + b2 ACMFEit + b3 ACNEDit
female financial experts to firm sustainability performance. + b4 AC tenureit + b5 Boardsizeit + b6 ESGCOMit + b7 Firmageit + B8 Big4it
Decisions about corporate sustainability reporting are influenced by + b9 Cashholdit + b10 SGROWit + b11 Firmsizeit + B12 BMTit + b13 DEBTit
personal values (Hemingway and Maclagan, 2004) because of the + b14 ROEit + B15 RnDit + b16 Inventoryit + B17 Litigationit + B18 Disaccrualit
voluntary nature of sustainability practices (Nadeem et al., 2017). ∑ ∑ ∑
Disclosure of sustainability issues by firms encompasses environmental, + indutsryD + yeardD + FirmD + εit
social, and governance information. Given the established difference (2)
between males and females, we expected that the focus of male and
female directors on the different dimensions of sustainability may not be
the same. This is especially because of the differences in values and 3.3. Variable measurement
personality traits between males and females that influence their choices
and decision-making (Donkor et al., 2021a; Nadeem et al., 2017; Oradi 3.3.1. Dependent variable
and E-Vahdati, 2021). It has been argued that the presence of females on The dependent variable of the study, firm sustainability perfor
boards and ACs is likely to improve governance given the ability of fe mance, was measured in line with the published literature using Refi
males to enhance oversight and monitoring (Oradi and E-Vahdati, nitiv ESG scores as a proxy (e.g., Paolone et al., 2021; Pozzoli et al.,
2021). In addition, the different roles played by females in society and 2022; Yarram and Adapa, 2021). According to Refinitiv,5 the ESG score
their care for life (Hofstede and Minkov, 2010; Liao et al., 2015) make is a percentile score that emanates from over 630 ESG company-level
them more inclined to consider environmental and social issues than measures captured and calculated by Refinitiv. The scores reflect
males (Ibrahim and Angelidis, 1994). Research has found that gender firms’ relative ESG performance, commitment, and effectiveness to ESG
diversity on the board and AC of a firm promotes its environmental and indicators (Paolone et al., 2021). Over 630 ESG company-level measures
social responsibility disclosures (Appuhami and Tashakor, 2017; Fría were grouped under 10 categories to reformulate the three pillar scores
s-Aceituno et al., 2013; Pitenoei et al., 2022). and the final ESG score. The higher the score, the higher the perfor
We thus contend that gender difference in financial experts is likely mance of the firm regarding sustainability. The individual ESG pillars
to influence their focus on the different dimensions of sustainability were also used to substantiate the findings and test the focus of MFEs
(ESG) performance. We thus formulated the following hypothesis: and FFEs on the AC. Thus, the environment pillar [ENVIRON], social
pillar [SOCIAL], and the governance pillar [GOVERN] were all
H3. There are significant differences in the sustainability performance measured as a percentile score.
focus of male and female financial experts on the audit committee.
3.3.2. Independent variables
3. Research design In line with the objectives of the study, the independent variables of
interest were the FFEs and MFEs on an AC. Following the published
3.1. Data and sample literature (e.g., Abbasi et al., 2020; Oradi and E-Vahdati, 2021; Zalata
et al., 2018), the study measured FFEs and MFEs on an AC as the number
To test the hypotheses for the study, data of listed firms in the United of FFEs on an AC (ACFFE_sum) and the number of MFEs on an AC
States from 2010 to 2021 was gleaned from multiple sources including (ACMFE_sum). For robustness, we adopted a second measure of FFEs
Compustat, BoardEx, and Refinitiv. The final data set, across all in and MFEs on an AC as the proportion of FFEs on an AC (ACFFE_ratio)
dustries, consisted of 2892 firms for 17,111 firm-year observations (see and MFEs on an AC (ACMFE_ratio).
Table 1).4 Sustainability performance data for sampled firms were ob
tained from their ESG scores using Refinitiv; data on gender expertise on 3.3.3. Control variables
ACs were gathered from BoardEx, and data on the financial performance To avoid the potential effects of omitted variable bias, confounding
of firms and other characteristics were obtained from Compustat. control variables were included in the study’s model (Bloomfield et al.,
2016; Whited et al., 2022). As evidenced in the literature (e.g.,
5
Refinitiv, May 2022. Environmental, Social and Governance scores from
Refinitiv. https://www.refinitiv.com/en/sustainable-finance/esg-scores#meth
4
Table 3 details the characteristics of firms for the study’s sample. odology.
4
Bloomfield et al., 2016; Whited et al., 2022) controlling for variables consistent with previous studies, which suggested a lower representa
established to influence a study’s outcome variable helps to improve the tion of females and FFEs on boards (Miglani and Ahmed, 2019; Zalata
internal validity of the study and assuages biases concerns arising from et al., 2018). The small representation of females on boards is not sur
confounding and other omitted extraneous variables. prising as there are no mandatory female quotas on boards in the US.
To address factors that may confound estimates of the relationship On other firm characteristics, on average, 8 percent of our total
between female and male AC experts and sustainability performance, sample had an ESG committee; the general board size was approxi
the study followed the published literature to control for several board mately 8.37 members (with a maximum cap of 16); sample firms were
and firm characteristics associated with sustainability performance. approximately 31.69 years old (Firmage), with a sales growth (SGROW)
From the agency theory perspective, corporate governance mechanisms of 12 percent; 82 percent were audited by the ‘Big Four’ audit firms,
such as the board, audit committee and ESG committee are essential for while 9 percent had litigation expenses. The mean firm size was 8.02
transparency in the reporting of financial and non-financial information (actual = USD16.433 billion). On average, cash holdings represented 19
(Endrikat et al., 2020; Kathy Rao et al., 2012) because such mechanisms percent of total assets, DEBT represented 41 percent of total assets, RnD
reduce agency conflict (Dey, 2008). Thus, corporate governance char represented 4 percent of total assets, and inventory represented 7
acteristics such as board size (Boardsize), AC independence (ACNED), percent of total assets. The average book-to-market value (BMT) was 46
AC tenure (AC_tenure), and the presence or not of an ESG committee percent, with a return on equity (ROE) of approximately 2 percent.
(ESGCOM) have been found to influence sustainability performance Table 4 presents the correlation matrix of the variables of interest.
(Al-Shaer and Zaman, 2016; Nadeem et al., 2017; Yarram and Adapa, Both FFEs on the AC (i.e., both ACFFE_sum and ACFFE_ratio), and MFEs
2021), and are therefore controlled in our model. Similarly, we on the AC (i.e., both ACMFE_sum and ACMFE_ratio) were positively
controlled for firm characteristics that have been identified as associated associated with a firm’s sustainability performance. Higher levels of
with sustainability performance such as firm size (Firmsize), firm per FFEs on the AC were associated with lower levels of MFEs on the AC, and
formance (ROE), auditor quality (Big4), growth opportunity (SGROW), vice-versa. The low levels of correlations among the independent vari
firm age (Firmage), financial capacity (Cashhold), leverage (DEBT), ables gave no concern for multicollinearity (Kılıç and Kuzey, 2018).
research and development (RnD), inventories (Inventory),
market-to-book value (BMT), high litigation risk (Litigation), and 4.2. Multivariate regression analysis
discretionary accruals (Disaccrual) (Artiach et al., 2010; Byron and Post,
2016; Carter et al., 2010; El-Bassiouny and El-Bassiouny, 2019; Hackett Table 5 presents results related to the influence of ACFFEs (measured
et al., 2020) (see Table 2). This is based on the assertion that these as ACFFE_sum and ACFFE_ratio) on sustainability performance. Column
characteristics are essential in determining the visibility of firms. The 1 of Table 5 shows a positive and statistically significant coefficient of
political cost hypothesis suggests that firms with these characteristics ACFFE_sum (β = 0.031 and t-stat = 9.278). This suggests that on average
are likely to possess the resources that enable them to engage in sus when FFEs on the AC increased by one, the mean sustainability perfor
tainability activities (Artiach et al., 2010; Omran et al., 2021; Zaid et al., mance increased by 3.1 percent. Given the mean ESG_score of 39
2020) and are more motivated to improve their sustainability actions as percent, this should translate to an average increase of 1.21 percent in
part of an overall strategy to reduce potential political costs (Branco and ESG score. The results remained statistically similar for ACFFE_ratio (β
Rodrigues, 2008; Watts and Zimmerman, 1978). = 0.139 and t-stat = 9.540 – Column 2). These results confirmed Hy
pothesis 1 by showing that ACs with FFEs had an influence on sustain
4. Empirical results and analysis ability performance.
Table 5 also presents results related to the influence of ACMFEs
4.1. Descriptive statistics and correlation analysis (ACMFE_sum; ACMFE_ratio) on sustainability performance. The results
showed a positive influence of ACMFE on sustainability performance
Table 3 presents the descriptive statistics of the sample. On sus comparable to that of ACFFEs. Specifically, the coefficient on ACMFE_
tainability performance, the average ESG score was 39 percent, while sum (β = 0.006 and t-stat = 2.836) suggested that on average, when
only 27 percent of the sample scored above 50 percent (ESG_Highscore). MFEs on the AC increased by one, the mean sustainability performance
The average scores for Environment, Social, and Governance were 24 increased by 0.6 percent. Given the mean ESG_score of 39 percent, this
percent, 42 percent, and 48 percent respectively. These scores were should translate to an average increase of 0.23 percent in ESG score. The
within the range of Lu and Herremans (2019), and Pozzoli et al. (2022). result in Column 2, where MFEs on the AC is measured as ACMFE_ratio
For AC characteristics, we found that on average an AC was made up (coefficient = 0.029 and t-statistic = 3.421), affirmed the finding. These
of 4.34 members, with 99 percent of our sample exclusively composed of results supported Hypothesis 1 (i.e., MFEs). Overall, the results for H1
independent directors (ACNED). The average tenure (AC_tenure) was suggested that both FFEs and MFEs influenced sustainability
4.49 years, with the longest serving number of years being 17.08. On AC performance.
diversity, the average number of females on an AC (ACFEM_sum) was These findings generally supported the essence of financial experts
approximately 0.9, which meant that females accounted for an average on the AC, but from the perspective of non-financial reporting. In this
proportion of 20 percent of an AC. This was within the range of Miglani view, the study aligned with previous studies that projected the need for
and Ahmed (2019) and Zalata et al. (2018). On AC expertise, ACs on more financial experts on the AC (Abbasi et al., 2020; Oradi and
average had approximately 2.4 experts, which meant that experts E-Vahdati, 2021; Pozzoli et al., 2022; Zalata et al., 2018). The findings
accounted for 56 percent of AC members. Assessing the variation in also corroborate the agency theory which suggests that the inclusion of
gender of AC experts showed that the mean number of MFEs (ACM financial experts on the AC improves the committee’s effectiveness
FE_sum) was approximately 1.91, representing 45 percent of all AC (Al-Shaer and Zaman, 2018; Miglani and Ahmed, 2019; Pozzoli et al.,
members (ACMFE_ratio); while the average number of FFEs (ACFFE_ 2022). While previous studies have examined board gender diversity,
sum) was approximately 0.48, representing 11 percent of all AC mem financial performance (e.g., Gull et al., 2018; Joecks et al., 2013; Miglani
bers (ACFFE_ratio). Overall, the AC gender diversity statistics were and Ahmed, 2019), and non-financial performance (e.g., Donkor et al.,
5
2021a; Lu and Herremans, 2019; Yarram and Adapa, 2021), this study Furthermore, although the MFEs had positive coefficients on the
contributes to the published literature by not only focusing on gender Environment and Governance pillars, these coefficients were smaller
diversity on a board committee, but also by examining gender diversity than the coefficients of FFEs. To further affirm Hypothesis 3, we thus
among AC financial experts and the influence of such diversity on sus further tested whether the differences between the coefficients were
tainability performance. This is distinct from other recent literature, statistically significant. The results (Prob > F = 0.0000) of tests of pairs
which has focused on AC gender diversity on financial and audit issues of coefficients across all columns in Table 6 (reported in Panel B)
(Abbasi et al., 2020; e.g., Oradi and E-Vahdati, 2021; Zalata et al., rejected the null hypothesis that there is no difference between female
2018). and male financial experts, and showed instead that the differences were
Interestingly, although both ACFFEs and ACMFEs had a positive statistically significant. Thus, although FFEs influence environment and
influence on sustainability performance, it can be observed that the governance issues more than social issues, the influence of FFEs across
coefficients and t-statistics for both measures of ACFFEs were larger than all three ESG pillars is more than that of their male counterparts. This
those of ACMFEs (Table 5, Columns 1 and 2). Economically, while an affirmed that females, especially FFEs on ACs, were more responsive to
increase in ACFFE increased the average ESG_score by 1.21 percent, the issues of sustainability than their male counterparts (Appuhami and
increase in average ESG_score attributable to an increase in an ACMFE Tashakor, 2017; Pitenoei et al., 2022). These findings give credence to
was only 0.23 percent. These results signalled that FFEs had more in the resource dependence theory (Kim and Starks, 2016).
fluence on sustainability performance than MFEs. To fully establish the
difference between the influence of FFEs and MFEs on sustainability 4.2.1. Alternative explanation
performance, we statistically tested whether the coefficients for FFEs To rule out concerns that our hypothesised relationships were being
and MFEs were statistically equal. The results (Prob > F = 0.0000) of driven by the gender diversity of an AC and not necessarily by the
tests of pairs of coefficients (reported in Panel B of Table 5) rejected the gender of the experts, we performed two additional tests.
null hypothesis that there is no difference between the influence of First, we reran model 1 replacing expert variables with gender di
ACFFEs and ACMFEs on sustainability performance, and showed instead versity variables. We measured gender diversity as the number
that the difference was statistically significant (i.e., for both sum and (ACFEM_sum) and ratio (ACFEM_ratio) of females on the AC. The results
ratio measures). This supported our prediction in H2 that ACFFEs have are reported in Table 7. From Panel A of Table 7, Column 1, the coef
more significant influence on sustainability performance than their male ficient of gender diversity on the AC (ACFEM_sum, β = 0.025) was
counterparts. This finding aligned with Zalata et al. (2018), who found smaller than the coefficient of FFEs on the AC (ACFFE_sum) reported in
that FFEs on the AC significantly reduced firms’ earnings management Table 5 (β = 0.031). This suggests that FFEs have a greater impact on
practices, but MFEs on the AC did not. Our results further supported sustainability than the mere presence of females on the AC. We statis
those of Oradi and E-Vahdati (2021), who found that FFEs on the AC tically tested the difference in coefficients in the two regressions and the
were associated with less ICW, whereas MFEs on the AC were not difference (unreported) was statistically significant. From Panel B of
significantly associated with ICW. By focusing on non-financial report Table 7, Column 1, the results remained statistically similar when we
ing, which seems to be missing in the published literature, this study focused on the ratio measures. A consistent explanation was further
provides evidence that FFEs on the AC have more influence on a firm’s established when the pillars of ESG were considered (Table 7, Panels A
sustainability performance than MFEs on the AC. The results affirm the and B, Columns 2–4).
opinions of Zalata et al. (2018) and Abbasi et al. (2020) that the con Second, we examined a subsample of firms with at least one female
tradictory literature on the effects of AC financial expertise (e.g., Bédard on their AC. In this sample, we compared ESG scores and ESG pillars of
and Gendron, 2010; Buallay and Al-Ajmi, 2020; Widyasari and Ayunda, firms with at least one female expert - ACFFE_dummy (i.e., female ex
2020) could be addressed by considering the gender diversity of experts. perts = 1), and those with no female experts (i.e., no female_experts =
By showing that FFEs on the AC are likely to pay more attention to 0). The results are reported in Table 7, Panel C. The results show that
sustainability issues and their advancement than their male counter firms with FFEs had higher sustainability performance compared with
parts, our result confirms the resource dependence theory, that females firms with no FFEs. Specifically, the results suggest that ACs with at least
are a source of valuable skills and experience for the advancement of a one FFE are positively and significantly associated with firms’ sustain
firm’s sustainability performance. ability performance (i.e., ESG_Score, ENVIRON, SOCIAL, GOVERN).
Hypothesis 3 examined whether there is a difference in the sustain This implies that the presence of FFEs on a firm’s AC is key for its sus
ability performance focus (i.e., Environment, Social, and Governance tainability performance, and that the study’s outcome was not driven by
pillars – Model 2) of MFEs and FFEs on an AC. The results are reported in the mere presence of females on the AC.
Table 6. The coefficients of ACFFE_sum and ACFFE_ratio were positive
and significant across all three pillars of ESG. The MFEs variables 4.2.2. Further analyses
(ACMFE_sum and ACMFE_ratio) were positive for the environmental Overall, the results indicate that ACFFEs have a greater influence on
and governance pillars. However, we found no significant relationship sustainability performance and the respective ESG pillars than ACMFEs.
for the social pillar. These results suggest that males may not be as Building on these, we further analysed whether ACs whose experts were
concerned as females about social issues. This confirms assertions that exclusively female experienced higher sustainability performance
females are more concerned with societal issues and care for life than compared with ACs with exclusively MFEs. The results as reported in
males (Hofstede and Minkov, 2010; Ibrahim and Angelidis, 1994; Liao Table 8 show that a female-only expert did not have a significant in
et al., 2015). According to Liao et al. (2015) and Ibrahim and Angelidis fluence on sustainability performance. However, having only MFEs
(1994), female directors are more inclined to social responsibility than generated a negative association with sustainability performance. The
their male counterparts. The results further aligned with previous results remained consistent when we analysed for ESG pillars. Taken
studies postulating that gender diversity on boards and ACs promotes together, the results of these tests suggest that having experts of the
social and environmental disclosures (Appuhami and Tashakor, 2017; same gender on the AC is not beneficial to firms’ sustainability perfor
Frías-Aceituno et al., 2013; Pitenoei et al., 2022). mance. Hence, firms will perform better on sustainability if they have a
6
good mix of male and female experts on their AC. This affirms previous Little attention has been given to non-financial reporting even though
studies, which have asserted that a completely male board (i.e., uniform investors have an increased interest in firm sustainability performance.
group) is detrimental while a ‘tilted group’ or a ‘balanced group’ is There have also been calls for studies to examine the gender diversity
beneficial (Joecks et al., 2013; Kanter, 1977). Thus, from the point of effects of financial experts on a firm’s AC because the established dif
view of the composition of experts on the AC, a completely male group ference in socialisation between males and females suggests that females
of experts is detrimental to sustainability while a completely female have unique attributes that make them useful in strengthening the
group of experts does not affect sustainability performance. A group effectiveness of the AC. This study thus explored the role of the gender of
tilted towards FFEs advances firms’ sustainability more than a group AC financial experts on firm sustainability performance.
tilted towards MFEs. We found both the number and ratio of FFEs on a firm’s AC to be
significantly positively related to firm sustainability performance.
4.2.3. Robustness Similarly, the presence of MFEs on the AC was also significantly and
We performed several robustness tests to support our main analyses positively related to firm sustainability performance. This suggests that
and to assuage endogeneity concerns. Thus, we re-examined our hy the presence of financial experts on the AC, irrespective of their gender,
potheses using a second measure of sustainability performance does influence the sustainability behaviour of firms. Thus, the expertise
(ESG_Highscore), change analysis, lead-lagged analysis, and instru of financial experts on the AC may not be useful only for safeguarding
mental variable model (ie., Heckman 2SLS). the quality of financial reporting, but also for promoting non-financial
ESG Highscore represents ESG performance measured as a dummy objectives such as sustainability performance. However, the magni
variable with a value of 1 if ESG_score is greater than 0.50 and tude of the influence of AC financial experts on firm sustainability per
0 otherwise. The results reported in Table 9, Panels A and B are formance differed significantly between males and females. We found
consistent with the main results of the study (Tables 5 and 6). that changes in FFE composition on a firm’s AC had a greater influence
Change Analysis – To address potential issues of omitted variable on firms’ sustainability performance than MFE. Therefore, to achieve
bias and reverse causality, the study followed the published literature by greater changes in sustainability performance, the gender of financial
re-examining the study’s model using change level regression analysis experts on the AC matters. Hence, we support the assertion that the
(Donkor et al., 2021b, 2022; Obeng et al., 2020). Change was defined as socialisation of females, their roles in society, beliefs, and values make
t1 – t. Panel C of Table 9 presents the abridged results. The results them predisposed to pay more attention to sustainability issues than
showed that a change in FFEs on the AC leads to a greater percentage their male counterparts. Regarding the three pillars of ESG, we found
change in firms’ sustainability performance. Similarly, the change in that the focus and emphasis of ACMFEs and ACFFEs on each pillar
FFEs significantly influenced the three pillars of ESG. However, the differed significantly. Firstly, while FFEs had a significant influence on
change in MFEs on AC were insignificant to sustainability performance. all three pillars of ESG, MFEs did not influence the social pillar. This
Lead-lagged Analysis – Hinged on the assumption that ‘Y1 cannot suggests that on social issues the attention of FFEs is remarkably
explain Xt-1’ (Bellemare et al., 2017), we followed the published litera different from that of MFEs on the AC. By their nature, males are
ture (e.g., Donkor et al., 2021b; Li, 2016) to re-examine our models with generally more concerned about economic performance than social
lagged FFEs and MFEs. Panel D of Table 9 presents the results of the performance. However, on the environmental and governance pillars of
lead-lag analysis. The results were both quantitatively and qualitatively ESG, MFEs on the AC did exert some influence. Nevertheless, the in
similar to those reported in Tables 5 and 6 fluence of FFEs on the environmental and governance pillars was
Heckman 2SLS – In line with the published literature, we further significantly greater than MFEs. Our results were found to be robust as
employed an instrumental variable approach – the Heckman two-stage we employed a variety of analyses (see ‘Robustness’) to affirm the
selection model – to address issues of endogeneity (Donkor et al., consistency of our findings.
2021b; Lopatta et al., 2020; Nadeem, 2020). The challenge with the This study contributes to the existing literature in two ways. First, we
instrumental variable approach is identifying a variable (i.e., the in have affirmed the positive association between AC financial experts and
strument) that correlates with selecting FFEs on the AC but is unrelated firm sustainability performance, an area of research which remains
to sustainability performance. Following Oradi and E-Vahdati (2021), contested. Second, we expanded the AC financial experts’ literature by
we adopted the percentage of FFEs on the AC per industry year group as introducing gender effects on the association between AC financial ex
the instrumental variable. The inverse Mills ratio (IMR) was included in perts and firm sustainability performance. We have established that
the second stage. Panel E of Table 9 presents the results. For all models, FFEs on the AC have a greater influence on firm sustainability perfor
the results indicated a positive significant association of ACFFEs with mance than MFEs. This gives credence to the concept of gender social
sustainability performance and the three pillars of ESG. However, for isation and resource dependence theory.
ACMFEs, a positive and significant association was established with Our findings are of interest to investors and firms seeking improve
sustainability performance, and with the environmental and governance ments in sustainability performance. Such firms should consider
pillars, but not with the social pillar, as already reported in other increasing the number of financial experts on their AC as such expertise
models. has implications not only for financial reporting and risk but also for
The alignment of the results suggests that the main results from the sustainability performance. Furthermore, the gender of financial experts
OLS estimation model are robust. on the AC should preferably be female if greater changes in sustain
ability performance are expected. Regulators and advocates for diversity
5. Conclusion on boards may find our study useful as it informs them of the role played
by FFEs on the AC in advancing sustainability performance. We however
The AC of a board has increased in importance as a corporate note that female representation on the board and AC of US firms is low.
governance mechanism for corporations. The role of the AC has evolved However, based on our findings on the value of female financial experts
to encompass oversight of sustainability activities and information in on the AC relative to sustainability performance, policymakers should
addition to its traditional role of safeguarding the credibility of the encourage firms to improve gender diversity on their boards and com
financial reporting process. Previous studies have suggested that the mittees. Perhaps, consideration may be given to mandatory quotas for
presence of financial experts on a firm’s AC is essential to its effective female representation on boards by regulators. Although we included
ness because such expertise improves understanding of financial several control variables, industry and year fixed effects, performed two-
reporting, external audits, and risks. However, studies on the effects of way firm and year clustering, and several additional tests to assess the
AC financial expertise have focused on internal controls, internal audi robustness of our results, we acknowledge that our models have inherent
tors, external auditors, financial performance, and reporting quality. limitations. These make them incomparable to natural experiments in
7
assessing causal effects. Hence, our results may not imply causal effect of project. Kwadjo Appiagyei: Conceptualization, Contributed to the
FFEs or MFEs on firm sustainability performance and should therefore conceptualization of the ideas for the manuscript., Reviewed literature.,
be interpreted cautiously. Future studies may reassess our hypothesised Drafted the final paper – for the coherence of ideas and meriting intel
relationships by establishing causation. Furthermore, although the size lectual context for discussions., Contributed to the final approval of the
of the capital market in the United States is big and offers sufficient version for submission., Jointly accountable for all aspects of the project.
available data, focusing on a single country limits the generalisability of
our findings to other contexts. Future research may therefore consider
several capital markets to advance the literature. Declaration of competing interest
CRediT authorship contribution statement The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
Sally Mingle Yorke: Conceptualization, Data curation, Contributed the work reported in this paper.
to the conceptualization of the ideas for the manuscript, Conceived and
designed the analysis., Collected a portion of the data and prepared the Data availability
data., Supported in methodology writing., Contributed to the final
approval of the version for submission., Jointly accountable for all as Data will be made available on request.
pects of the project. Augustine Donkor: Conceptualization, Data
curation, Methodology, Contributed to the conceptualization of the Acknowledgement
ideas for the manuscript., Supported in the writing of the literature re
view., Supported in data collection and the preparation of the data., We thank the College of Professional and Continuing Education, The
Wrote the methodology and analysis., Contributed to the final approval Hong Kong Polytechnic University, Hong Kong for partly sponsoring the
of the version for submission., Jointly accountable for all aspects of the proofreading of this manuscript.
Appendix
Table 1
Sample Selection
Firms Firm Years
Initial Compustat data for 2010–2021 19,447 136,045

Firms missing Combined BoardEx data (profile, employment, and committee data) 10,786 59,475
Firms missing Refinitiv ESG data 5715 58,474
Firms missing variable observations for main analyses 54 985
Number of firms and firm-year observations for final analysis 2892 17,111
Table 2
Variable Definitions
Variable Definition
ESG_score ESG score by refinitiv divided by 100

ESG_pillars Individual ESG pillar score by refinitiv divided by 100 (i.e., Environment [Environ], Social and Governance [Govern] pillars)
ACFFE_sum Number of female experts on the AC
ACFFE_ratio Proportion of female experts on the AC
ACMFE_sum Number of male experts on the AC
ACMFE_ratio Proportion of male experts on the AC
ACFEM_sum Number of females on the AC
ACFEM_ratio Proportion of females on the AC
ACNED Dummy with value of one if AC is made up of only independent directors and zero if otherwise
AC_tenure Average tenure of AC members; combined tenure of all AC members divided by number of AC members
Boardsize Natural log of the number (sum) of board directors
ESGCOM Dummy with value of one if firm has an ESG committee and zero if otherwise
Firmage Natural log of the number of years of record of a firm as available in Compustat.
Big4 Dummy with value of one is target’s auditor is Ernst & Young” “Deloitte & Touche” KPMG” Pricewaterhouse, zero otherwise
Cashhold Ratio of a firm’s cash and short-term investment to total assets.
SGROW The ratio of a firm’s sales in the current year minus the sales in previous year to sales in the previous year.
Firmsize Natural log of firm’s total assets.
BMT Common equity divided by market value (stock price * number of common shares outstanding)
DEBT Sum of current liabilities and long-term debt divided by total assets
ROE Income before extraordinary items - adjusted for common stock equivalent divided by average of opening and closing common equity
RnD Research and Development Expense divided by total asset
Inventory Total inventories divided by total assets
Litigation Dummy with value of one if a firm has litigation expense and zero if otherwise
Disaccrual Represents discretionary accruals measured using Kothari et al. (2005) performance
8
Table 3
Summary statistics
Variables N mean p50 Std. min p25 p75 max
ESG_score 17111 0.39 0.19 0.08 0.25 0.36 0.52 0.86

ESG_Highscore 17111 0.27 0.45 0.00 0.00 0.00 1.00 1.00
Environ 17110 0.24 0.27 0.00 0.00 0.14 0.44 0.90
Social 17110 0.42 0.21 0.06 0.26 0.38 0.56 0.92
Govern 17111 0.48 0.22 0.04 0.30 0.48 0.66 0.92
ACFFE_sum 17111 0.48 0.00 0.67 0.00 0.00 1.00 3.00
ACMFE_sum 17111 1.91 2.00 1.20 0.00 1.00 3.00 5.00
ACFFE_ratio 17111 0.11 0.00 0.15 0.00 0.00 0.25 0.60
ACMFE_ratio 17111 0.45 0.40 0.26 0.00 0.25 0.67 1.00
ACFEM_sum 17111 0.91 1.00 0.85 0.00 0.00 1.00 3.00
ACFEM_ratio 17111 0.20 0.20 0.18 0.00 0.00 0.33 0.67
ACNED 17111 0.99 1.00 0.08 0.00 1.00 1.00 1.00
AC_tenure 17111 4.49 3.56 4.04 0.00 1.14 6.86 17.08
*Boardsize 17111 8.37 2.80 3.00 6.00 8.00 10.00 16.00
ESGCOM 17111 0.08 0.00 0.27 0.00 0.00 0.00 1.00
*Firmage 17111 31.69 20.00 2.00 15.00 27.00 43.00 72.00
Big4 17111 0.82 1.00 0.38 0.00 1.00 1.00 1.00
Cashhold 17111 0.19 0.09 0.23 0.00 0.03 0.24 0.96
SGROW 17111 0.12 0.06 0.36 − 0.63 − 0.01 0.17 2.44
Firmsize 17111 8.02 8.04 1.90 3.43 6.80 9.23 12.72
BMT 17111 0.46 0.38 0.42 − 0.54 0.19 0.66 2.23
DEBT 17111 0.41 0.42 0.26 0.00 0.22 0.57 1.25
ROE 17111 0.02 0.10 0.69 − 3.91 0.00 0.18 2.92
RnD 17111 0.04 0.00 0.10 0.00 0.00 0.03 0.61
Inventory 17111 0.07 0.02 0.11 0.00 0.00 0.11 0.55
Litigation 17111 0.09 0.00 0.28 0.00 0.00 0.00 1.00
Disaccrual 17111 3.66 3.66 0.09 3.36 3.61 3.70 3.97
Note: Table 3 presents descriptive statistics for variables used in our analyses. * variables are not transformed in the table above for ease of interpretation but are log-
transformed when used as independent.
9
S.M. Yorke et al.
Table 4
Correlation Analysis Table
Variables 1 2 3 4 5 6 7 8 9 10 11 12
1. ESG_score 1
2. Environ 0.856*** 1
3. Social 0.873*** 0.727*** 1
4. Govern 0.721*** 0.450*** 0.398*** 1
5. ACFFE_sum 0.303*** 0.250*** 0.247*** 0.254*** 1
6. ACMFE_sum 0.220*** 0.218*** 0.151*** 0.208*** 0.0438*** 1
7. ACFFE_ratio 0.253*** 0.201*** 0.210*** 0.212*** 0.947*** − 0.0570*** 1
8. ACMFE_ratio 0.0949*** 0.0964*** 0.0560*** 0.108*** − 0.102*** 0.863*** − 0.123*** 1
9. ACNED 0.0372*** 0.0263*** 0.0234** 0.0437*** 0.00799 − 0.000585 0.0151* 0.0164* 1
10. AC_tenure 0.0969*** 0.136*** 0.0283*** 0.129*** − 0.0797*** 0.142*** − 0.0962*** 0.106*** 0.0174* 1
11. Boardsize 0.491*** 0.444*** 0.398*** 0.367*** 0.237*** 0.282*** 0.146*** 0.0481*** 0.0013 0.178*** 1
12. ESGCOM 0.261*** 0.259*** 0.230*** 0.182*** 0.0916*** 0.0878*** 0.0637*** 0.0274*** − 0.00843 0.0214** 0.209*** 1
13. Firmage 0.418*** 0.430*** 0.280*** 0.375*** 0.130*** 0.248*** 0.0642*** 0.117*** 0.0233** 0.433*** 0.407*** 0.172***
14. Big4 0.305*** 0.309*** 0.322*** 0.161*** 0.164*** 0.132*** 0.155*** 0.0911*** 0.0169* 0.140*** 0.258*** 0.0908***
15. Cashhold − 0.207*** − 0.242*** − 0.0770*** − 0.237*** − 0.109*** − 0.198*** − 0.0632*** − 0.111*** − 0.0292*** − 0.192*** − 0.284*** − 0.103***
16. SGROW − 0.109*** − 0.121*** − 0.0527*** − 0.110*** − 0.0449*** − 0.0917*** − 0.0237** − 0.0495*** 0.014 − 0.0965*** − 0.115*** − 0.0394***
17. Firmsize 0.576*** 0.598*** 0.496*** 0.359*** 0.214*** 0.243*** 0.157*** 0.107*** 0.0501*** 0.228*** 0.583*** 0.214***
18. BMT − 0.0690*** − 0.0508*** − 0.124*** 0.0381*** − 0.0261*** 0.0477*** − 0.0381*** 0.0261*** 0.0157* 0.0377*** 0.0366*** − 0.00137
19. DEBT 0.130*** 0.152*** 0.131*** 0.0652*** 0.0949*** 0.0550*** 0.0916*** 0.0525*** − 0.0127 − 0.0338*** 0.0189* 0.0703***
20. ROE 0.142*** 0.143*** 0.0906*** 0.122*** 0.0497*** 0.0713*** 0.0359*** 0.0417*** 0.0254*** 0.0955*** 0.121*** 0.0362***
21. RnD − 0.166*** − 0.199*** − 0.0408*** − 0.200*** − 0.100*** − 0.159*** − 0.0646*** − 0.0821*** − 0.0153* − 0.168*** − 0.221*** − 0.0890***
10
22. Inventory 0.0368*** 0.0725*** − 0.011 0.0678*** − 0.00977 0.0657*** − 0.0223** 0.0409*** 0.00225 0.0926*** − 0.0192* − 0.00809
23. Litigation 0.0397*** 0.0442*** 0.0235** 0.0446*** 0.00728 0.0352*** 0.00181 0.0248** 0.00528 0.0222** 0.0338*** 0.0201**
24. Disaccrual − 0.0600*** − 0.0978*** − 0.0279*** − 0.0539*** − 0.0433*** − 0.0391*** − 0.0352*** − 0.0264*** 0.0118 − 0.0387*** − 0.0547*** − 0.0548***
Variables 13 14 15 16 17 18 19 20 21 22 23 24
13. Firmage 1
14. Big4 0.172*** 1
15. Cashhold − 0.392*** − 0.0602*** 1
16. SGROW − 0.190*** − 0.0502*** 0.171*** 1
17. Firmsize 0.460*** 0.376*** − 0.492*** − 0.116*** 1
18. BMT 0.0309*** − 0.112*** − 0.258*** − 0.113*** 0.161*** 1
19. DEBT 0.0452*** 0.213*** − 0.147*** − 0.0176* 0.0258*** − 0.372*** 1
20. ROE 0.189*** 0.0618*** − 0.259*** − 0.0316*** 0.222*** − 0.00158 − 0.0178* 1 1
21. RnD − 0.315*** − 0.0480*** 0.691*** 0.136*** − 0.455*** − 0.228*** − 0.0131 − 0.309*** − 0.131*** 1
Journal of Cleaner Production 414 (2023) 137553

22. Inventory 0.154*** 0.0460*** − 0.146*** − 0.0362*** − 0.0517*** − 0.0108 0.122*** 0.0693*** − 0.0669*** 0.0284*** 1
23. Litigation 0.0513*** 0.0244** − 0.0777*** − 0.0295*** 0.0496*** 0.0280*** 0.0464*** 0.0152* 0.141*** 0.0718*** − 0.0327*** 1
24. Disaccrual − 0.0928*** − 0.0762*** 0.117*** 0.0500*** − 0.0894*** − 0.000964 − 0.168*** − 0.0283***
Table 4 reports the pairwise correlations between variables used in the analyses. ***, **, * represents statistical significance of 0.01, 0.05, and 0.10 significance levels.
TABLE 5
Relation between AC Experts’ Gender and ESG Performance
ESG_Score
β t β t
ACFFE_sum 0.031*** 9.278

ACFFE_ratio 0.139*** 9.540
ACMFE_sum 0.006** 2.836
ACMFE_ratio 0.029*** 3.421
ACNED 0.041** 3.020 0.038** 2.868
AC_teure − 0.000 − 0.220 − 0.000 − 0.265
Boardsize 0.081*** 10.258 0.090*** 11.541
ESGCOM 0.049*** 4.856 0.049*** 4.959
Firmage 0.049*** 10.683 0.050*** 11.053
Big4 − 0.002 − 0.248 − 0.003 − 0.380
Cashhold 0.043** 2.266 0.043** 2.256
SGROW − 0.016*** − 3.253 − 0.016*** − 3.290
Firmsize 0.054*** 21.639 0.053*** 21.692
BMT − 0.026*** − 4.666 − 0.026*** − 4.619
DEBT − 0.003 − 0.269 − 0.002 − 0.215
ROE 0.005** 2.936 0.005** 2.801
RnD 0.140*** 5.847 0.137*** 5.723
Inventory 0.025 0.710 0.029 0.822
Litigation 0.004 0.902 0.004 0.916
Disaccrual 0.013 0.820 0.013 0.861
Year effect Yes Yes
Industry effect Yes Yes
Firm Cluster Yes Yes
Industry Cluster Yes Yes
Constant − 0.482*** − 7.028 − 0.504*** − 7.471
2
R 0.538 0.539
Adjusted R2 0.536 0.536
Observations 17111 17111
Panel B: Difference between ACFFE and ACMFE (ACFFE > ACMFE)
ACFFE > ACMFE 0.025 0.110
Prob > F = 0.0000 Prob > F = 0.0000
Table 5 reports the regression results for testing the relationship between AC Experts’ Gender and ESG performance. The
dependent variable is ESG (ESG_Score). The independent variables of interest are female experts (ACFFE_sum; ACFFE_ratio)
and male experts (ACMFE_sum; ACMFE_ratio). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels,
respectively. All models include industry and year-fixed effects with firm and year clustering. Continuous variables are win
sorized at 1% and 99% levels.
Table 6
Relation between AC Experts’ Gender and respective ESG Pillars
ENVIRON SOCIAL GOVERN
1 2 3
β t β t β t β t β t β t
ACFFE_sum 0.031*** 6.291 0.020*** 5.532 0.044*** 9.432

ACFFE_ratio 0.132*** 5.989 0.088*** 5.438 0.203*** 9.850
ACMFE_sum 0.007** 2.452 0.002 0.670 0.011*** 4.433
ACMFE_ratio 0.026* 2.066 0.007 0.760 0.059*** 5.417
ACNED 0.004 0.224 0.001 0.043 0.016 0.882 0.015 0.803 0.089*** 7.349 0.083*** 6.886
AC_tenure − 0.001 − 1.334 − 0.001 − 1.356 − 0.002* − 2.122 − 0.002* − 2.153 0.004*** 3.885 0.004*** 3.938
Boardsize 0.063*** 5.724 0.073*** 6.724 0.068*** 7.245 0.072*** 7.888 0.096*** 8.778 0.110*** 10.375
ESGCOM 0.063*** 4.311 0.064*** 4.355 0.055*** 4.144 0.055*** 4.199 0.042*** 3.558 0.042*** 3.669
Firmage 0.049*** 7.458 0.051*** 7.747 0.030*** 5.414 0.031*** 5.590 0.068*** 11.380 0.070*** 11.780
Big4 − 0.026* − 2.154 − 0.027* − 2.190 0.013 1.794 0.012 1.746 0.002 0.237 0.001 0.056
Cashhold 0.057* 1.872 0.057* 1.840 0.069*** 3.359 0.069*** 3.345 0.009 0.430 0.010 0.444
SGROW − 0.030*** − 5.332 − 0.031*** − 5.419 − 0.007 − 1.128 − 0.008 − 1.155 − 0.015*** − 3.952 − 0.015*** − 3.982
Firmsize 0.087*** 20.072 0.087*** 20.223 0.064*** 27.644 0.064*** 27.588 0.019*** 6.155 0.019*** 6.062
BMT − 0.033*** − 4.049 − 0.033*** − 3.983 − 0.037*** − 5.697 − 0.037*** − 5.686 0.007 0.872 0.007 0.928
DEBT 0.001 0.052 0.002 0.104 − 0.009 − 0.765 − 0.009 − 0.740 0.004 0.296 0.005 0.358
ROE 0.004* 1.809 0.004 1.729 0.002 1.100 0.002 1.070 0.008** 3.104 0.008** 2.958
RnD 0.166*** 4.858 0.162*** 4.732 0.262*** 7.903 0.261*** 7.847 − 0.033 − 0.994 − 0.038 − 1.173
Inventory 0.080 1.371 0.085 1.451 − 0.009 − 0.235 − 0.007 − 0.191 0.070 1.617 0.077 1.771
Litigation 0.001 0.124 0.001 0.138 0.002 0.497 0.002 0.503 0.010 1.433 0.010 1.456
Disaccrual 0.001 0.025 0.001 0.025 0.010 0.583 0.010 0.590 0.001 0.033 0.002 0.077
Year effect Yes Yes Yes Yes Yes Yes
Industry effect Yes Yes Yes Yes Yes Yes
Firm Cluster Yes Yes Yes Yes Yes Yes
Industry Cluster Yes Ye Yes Yes Yes Yes
Constant − 0.760*** − 6.221 − 0.781*** − 6.437 − 0.407*** − 4.916 − 0.417*** − 5.058 − 0.260*** − 3.142 − 0.297*** − 3.630
(continued on next page)
11
Table 6 (continued )
ENVIRON SOCIAL GOVERN
1 2 3
β t β t β t β t β t β t
2
R 0.542 0.541 0.475 0.472 0.290 0.291
Adjusted R2 0.539 0.538 0.472 0.475 0.286 0.287
Observations 17110 17110 17110 17110 17111 17111
Panel B: Difference between ACFFE and ACMFE (ACFFE>ACMFE) for all ESG pillars
ACFFE>ACMFE 0.024 0.106 0.019 0.081 0.033 0.144
Prob > F = 0.0014 Prob > F = 0.0008 Prob > F = 0.0007 Prob > F = 0.0005 Prob > F = 0.0001 Prob > F = 0.0000
Table 6 reports the regression results for testing the relationship between AC Experts’ Gender and respective ESG Pillars. The dependent variables are respective scores
for ESG pillars (ENVIRON, SOCIAL, GOVERN). The independent variables of interest are female experts (ACFFE_sum; ACFFE_ratio) and male experts (ACMFE_sum;
ACMFE_ratio). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All models include industry and year-fixed effects with firm and
year clustering. Continuous variables are winsorized at 1% and 99% levels.
Table 7
Alternative Explanation
ESG_Score ENVIRON SOCIAL GOVERN
1 2 3 4
Panel A: AC Gender diversity - measured as the number of females on AC

β t β t β t β t
ACFEM_sum 0.025*** 8.066 0.026*** 6.234 0.019*** 5.339 0.031*** 8.876
Control Variables Yes Yes Yes Yes
R2 0.537 0.541 0.476 0.284
Adjusted R2 0.535 0.539 0.473 0.280
Observations 17111 17110 17110 17111
Panel B: AC Gender diversity - measured as the ratio of females on AC
β t β t β t β t
ACFEM_ratio 0.110*** 7.817 0.103*** 5.381 0.079*** 5.047 0.144*** 9.161
R2 0.537 0.540 0.476 0.285
Adjusted R2 0.535 0.538 0.473 0.281
Observations 17111 17110 17110 17111
Panel C: Subsample Analyses of Firms with at least a female on AC
β t β t β t β t
ACFFE_dummy 0.016*** 4.059 0.015** 2.590 0.008 1.765 0.026*** 3.717
R2 0.540 0.563 0.482 0.268
Adjusted R2 0.536 0.559 0.477 0.261
Observations 10879 10878 10878 10879
The table presents the regression output of alternative explanations with AC gender diversity measured as the number of females (ACFEM _sum) and the ratio of
females (ACFEM_ratio) on AC (Panel A and B) and sub-sample of firms with at least a female expert (ACFFE_dummy = 1) on AC (Panel C) on ESG performance and the
pillars of ESG (ESG_Score, ENVIRON, SOCIAL, GOVERN). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All models include
original control variables, industry and year-fixed effects with firm and year clustering. Continuous variables are winsorized at 1% and 99% levels.
Table 8
Further Analysis
ESG_Score ENVIRON SOCIAL GOVERN
1 2 3 4
Panel A: Female-only experts on AC

β t β t β t β t
ACFFE_only 0.013 1.391 0.017 1.367 0.010 1.060 0.011 0.865
R2 0.528 0.536 0.472 0.273
2
Adjusted R 0.525 0.534 0.469 0.269
Observations 17111 17110 17110 17111
Panel B: Male-only experts on AC
β t β t β t β t
ACMFE_only − 0.036*** − 8.317 − 0.037*** − 5.815 − 0.023*** − 4.731 − 0.051*** − 7.528
R2 0.535 0.540 0.474 0.284
Adjusted R2 0.533 0.538 0.471 0.280
Observations 17111 17110 17110 17111
Table 8 presents the regression output of female-only experts (ACFFE_only) on AC (Panel A) and male-only experts (ACMFE_only) on AC (Panel B) on ESG perfor
mance and the pillars of ESG (ESG_Score, ENVIRON, SOCIAL, GOVERN). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All
models include original control variables, industry and year-fixed effects with firm and year clustering. Continuous variables are winsorized at 1% and 99% levels.
12
Table 9
Robustness
ESG_Highscore ENVIRON_Highscore SOCIAL_Highscore GOVERN_Highscore
1 2 3 4
Panel A: ESG performance measured as a dummy (ESG_Highscore)

β t β t β t β t
ACFFE_sum 0.250*** 8.004 0.151*** 3.512 0.155*** 5.093 0.256*** 8.524
ACMFE_sum 0.049** 2.447 0.056** 2.536 0.024 1.177 0.064*** 4.627
Psuedo R2 0.4233 0.4361 0.3348 0.1622
Observations 17008 16987 17006 17100
Panel B: ESG performance measured as a dummy (ESG_Highscore)
β t β t β t β t
ACFFE_ratio 1.209*** 7.837 0.798*** 4.348 0.728*** 5.033 1.125*** 9.466
ACMFE_sum 0.260*** 2.830 0.275*** 2.589 0.127 1.474 0.318*** 4.577
Psuedo R2 0.4244 0.4368 0.3352 0.1622
Observations 17008 16987 17006 17100
ΔESG_Score ΔENV ΔSOCIAL ΔGOVERN
Panel C: Change Analysis
β t β t β t β t
ΔACFFE_sum 0.009*** 4.436 0.005* 2.121 0.005* 2.080 0.016*** 3.622
ΔACMFE_sum 0.000 0.314 0.001 0.997 0.001 0.776 − 0.001 − 0.984
ΔControl Variables Yes Yes Yes Yes
R2 0.030 0.053 0.029 0.013
Adjusted R2 0.023 0.047 0.022 0.007
Observations 13855 13854 13854 13855
ESG_Score ENV SOCIAL GOVERN
Panel D: Lead-Lag Analysis
β t β t β t β t
lagACFFE_sum 0.034*** 9.622 0.035*** 6.285 0.024*** 5.790 0.046*** 9.735
lagACMFE_sum 0.007*** (3.294) 0.009** 3.003 0.002 0.838 0.012*** 4.738
2
R 0.529 0.544 0.474 0.270
Adjusted R2 0.526 0.541 0.470 0.265
Observations 14244 14244 14244 14244
ESG_Score ENV SOCIAL GOVERN
Panel E: Heckmann Two-Stage Model
β t β t β t β t
ACFFE_sum 0.031*** 9.222 0.031*** 6.269 0.020*** 5.504 0.044*** 9.383
ACMFE_sum 0.007*** 3.180 0.008** 2.587 0.003 1.413 0.012*** 4.531
IMR − 0.013 − 1.506 − 0.010 − 0.942 − 0.020* − 2.129 − 0.011 − 1.120
R2 0.539 0.542 0.475 0.290
Adjusted R2 0.536 0.539 0.472 0.290
Observations 17111 17110 17110 0.286
The table presents the robustness outputs: Panel A and B – Alternative measure of ESG performance and ESG Pillars ESG_Highscore, ENVIRON_Highscore,
SOCIAL_Highscore, GOVERN_Highscore), Panel C – Change analysis (change is t1 – t), Panel D – lead-lag analysis and Panel E − Instrumental variable model
(Heckman two-stage selection model). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All models include original control
variables, industry and year-fixed effects with firm and year clustering. Continuous variables are winsorized at 1% and 99% lev.
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Journal of Cleaner Production 414 (2023) 137553

Contents lists available at ScienceDirect

Journal of Cleaner Production

Experts on boards audit committee and sustainability performance: The

1. Introduction 2018). However, studies on the relationship between AC members’

The committees of a firm’s board offer support to the board in per­

Firms Firm Years

Initial Compustat data for 2010–2021 19,447 136,045

ESG_score ESG score by refinitiv divided by 100

Variables N mean p50 Std. min p25 p75 max

ESG_score 17111 0.39 0.19 0.08 0.25 0.36 0.52 0.86

Journal of Cleaner Production 414 (2023) 137553

ACFFE_sum 0.031*** 9.278

ENVIRON SOCIAL GOVERN

ACFFE_sum 0.031*** 6.291 0.020*** 5.532 0.044*** 9.432

ESG_Score ENVIRON SOCIAL GOVERN

Panel A: AC Gender diversity - measured as the number of females on AC

ESG_Score ENVIRON SOCIAL GOVERN

Panel A: Female-only experts on AC

ESG_Highscore ENVIRON_Highscore SOCIAL_Highscore GOVERN_Highscore

Panel A: ESG performance measured as a dummy (ESG_Highscore)

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The committees of a firm’s board offer support to the board in per

ACFFE_sum 0.031* 6.291 0.020* 5.532 0.044*** 9.432