Effects of audit committee and critical mass of boardroom gender diversity on corporate sustainability: Empirical evidence from firm size

Abstract

Background: There is a growing volume of literature on corporate governance and corporate sustainability. Despite this, the linkage among a critical mass of board gender diversity (BGD), audit committee independence (ACI) and corporate carbon emissions is an unresolved issue.
Aim: The purpose of this study is to examine the impact of BGD and audit committee (AC) on (direct and indirect) carbon emissions (CO₂) performance. This article paves the way for an understanding of how firm size can affect the relationship between critical mass of BGD, ACI and corporate sustainability performance (CSP).
Setting: The study sample has listed firms from the Group of Seven (G7) economies.
Method: The study uses the fixed effects regression. The outcomes are robust across different methods and measurements (e.g. System GMM, Blau’s Index).
Results: The article finds that a critical mass of BGD (≥ 20% female representation) drives corporate sustainability performance by mitigating the level of carbon emissions (direct, indirect and total), indicating that token representation of women on corporate boards limits their effectiveness. The outcomes also show the effectiveness of ACI in promoting carbon emission deduction. Further, the study finds that firm size moderates the relationship between the critical mass of BGD and CSP. Meanwhile, the study finds that the moderating effect of firms’ size on the relationship between ACI and CSP are statistically insignificant.
Conclusion: The article offers empirical evidence that the efficacy of the BGD critical mass and ACI in promoting CSP, offering valuable implications and insights for the policymakers to align their governance structures and regulations with sustainability goals.
Contribution: The current work makes a unique contribution to the current empirical literature by investigating the effect of firm size on the linkage among the critical mass of BGD, ACI and CSP.