Board of directors’ characteristics and corporate sustainability performance: A mediating role of internal control mechanisms / A N M Asaduzzaman Fakir

A N M Asaduzzaman , Fakir (2020) Board of directors’ characteristics and corporate sustainability performance: A mediating role of internal control mechanisms / A N M Asaduzzaman Fakir. PhD thesis, Universiti Malaya.

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Abstract

The purpose of this study is to propose a framework and thereafter examine the relationship among the board of directors’ characteristics, internal control mechanisms, and corporate sustainability performance. In particular, it aims to uncover how the board specific characteristics influence internal control, which, ultimately, would enhance the sustainability performance of publicly listed companies. The premise of the resource dependence theory is utilized to identify the board characteristics that may influence the sustainability performance; namely, size, composition, leadership, ownership, diversity, and expertise. Inspired by the fit as mediation notion of contingency theory, the mediating role of internal control mechanisms, proxied by enterprise risk management (ERM) and management control systems (MCS), is also examined in this relationship. The majority of the previous studies concentrated on a few particular dimensions of sustainability like environmental and social aspects, whereas the governance and economic aspects remain unexplored in the literature. This study fills this important research gap through holistically conceptualizing sustainability performance. In addition to that interaction between corporate governance variables and sustainability is an under-researched area. This study put some light on it. The analysis finds support for board ownership and board expertise directly and positively influencing sustainability performance in Bangladesh context while the relationship between board characteristics and sustainability is indirect and mediated through internal control mechanisms. This implies that board members need to pursue specific attributes with a strong internal control environment in place to ensure sustainability performance in developing country context. Keywords: Board of directors’ characteristics; Corporate governance; Sustainability performance; Internal control mechanism; Enterprise risk management (ERM); Management control systems (MCS)

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