Effect of the existence and composition of a CSR committee of governance board on CSR decoupling: Moderating role of CEO’s educational specialization

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Effect of the existence and composition of a CSR committee of governance

board on CSR decoupling: Moderating role of CEO’s educational

specialization

University of Groningen , Faculty of Economics and Business Master Thesis, MSc Accountancy and Controlling

Fokelien Oosterhuis S2763958 Supervisor: dr. N. Hussain Date: 18th of January 2021 Word count: 111161 Abstract

Corporate Social Responsibility (CSR) is a widely studied topic however, the factors leading to a gap between CSR performance and CSR reporting, so-called CSR decoupling, have not been widely investigated. Therefore, this paper analyses the effect of the existence and composition of a CSR committee on CSR decoupling. Given that CEO characteristics can have an impact on firm-level decisions, the moderating effect of CEO’s educational specialization in Master’s level business administration (MBA) has been examined as well. The results based on an international sample of 7990 firm-year observations show that having a CSR committee is related to firms engaging more in CSR decoupling indicating that firms are using a CSR committee for signalling purposes only. Regarding the composition of the CSR committee, the results indicate that an increase in committee size leads to a decrease in CSR decoupling and an increase in committee independence leads to an increase in CSR decoupling. Having women on the committee is not significantly related to CSR decoupling. These relationships are moderated by CEO's educational specialization in MBA. Looking at the different dimensions of CSR, these results seem mainly driven by the environmental dimension.

Keywords: Upper echelon theory, Agency theory, CSR decoupling, CSR committee, CEO characteristics, MBA.

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Effect of the existence and composition of a CSR committee of governance board on CSR decoupling: Moderating role of CEO’s educational specialization

2 Table of content

1. Introduction ... 3

2. Literature review ... 6

2.1 Corporate governance and Corporate Social Responsibility ... 6

2.2 CSR decoupling ... 8 2.3 CEO characteristics ... 9 2.4 Hypotheses ... 12 2.4.1 CSR committee ... 12 2.4.2 CSR committee size. ... 12 2.4.3 CSR committee independence. ... 13

2.4.4 CSR committee gender diversity ... 13

2.4.5 The moderating role of CEO’s educational specialization. ... 14

3. Methodology ... 16

3.1 Data collection and sample ... 16

3.2 Variables ... 17

3.2.1 CSR Decoupling ... 17

3.2.2 CSR Committee. ... 17

3.2.3 CEO’s educational specialization. ... 18

3.2.4 Control variables. ... 18 3.3 Analysis Plan ... 19 4. Results ... 19 4.1 Descriptive statistics ... 19 4.2 Main analysis ... 23 4.3 Robustness check ... 25 5. Discussion ... 29 6. Conclusion ... 31

6.1 Conclusion and contribution ... 31

6.2 Limitations and direction for future research ... 32

6.3 Implications ... 33

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1. Introduction

Multiple scandals concerning CSR have appeared in the news, like the environmental disaster involving BP or the Dieselgate scandal of Volkswagen (VW). The Dieselgate scandal entailed Volkswagen reporting far lower emission levels of their cars than was actually the case by installing software that enabled cars to detect whether they were being tested. This scandal had serious consequences with the CEO resigning, car sales being deferred, and the crash of Volkswagen’s stock on the Frankfurter Stock Exchange (Siano, Vollero, Conte & Amabile, 2017). Not surprisingly investors are increasingly showing an interest in the CSR performance of firms when choosing which firms to invest in (Di Giuli & Kostovetsky, 2014; El Ghoul, Guedhami, Kwok & Mishra, 2011; Elliot, Jackson, Peecher & White, 2014). Additionally, firms are increasingly issuing CSR reports (Elliot et al.; Dhaliwal, Li, Tsang & Yang, 2011) and trying to integrate CSR into their business practices (Dhaliwal et al, 2011; El Ghoul et al., 2011). Logically CSR is a widely covered topic in academic literature. The relationship between CSR and the financial performance of firms received much academic interest and overall research has found a positive effect of CSR on firm performance (Brooks & Oikonomou, 2018; Busch & Friede, 2018). Other aspects regarding CSR have also been investigated among which factors that could influence a firm’s CSR engagement like CEO characteristics (Tang, Qian, Chen & Shen, 2015; Petrenko, Aime, Ridge & Hill, 2016), political preference of directors (Di Giuli & Kostovetsky, 2014), and firm’s location near a major city, financial centre or a CSR dense area (Husted, Jamali & Saffar, 2016). Additionally, the consequences of CSR such as the cost of equity capital (Dhaliwal et al., 2011; El Ghoul et al, 2011; Husted et al., 2016) and investor estimates of firm fundamental value (Elliot et al., 2014) were examined.

In the past decades, literature shows that a discrepancy exists between policies and reporting practices with regard to social and environmental behaviour of the firm on the one hand and actual behaviour and implementation of these policies on the other hand (Boiral, 2013; Cho, Laine, Roberts & Rodrigue, 2015; Christman & Taylor, 2006; Crilly, Zollo & Hansen, 2012; García-Sánchez, Hussain, Khan & Martinez-Ferrero, 2020; Graafland & Smid, 2016; Hawn & Ioannou, 2016; Jamali, Lund-Thomsen & Khara, 2017; Marano, Tashman & Kostova, 2017; Sauerwald & Su, 2019; Tashman, Marano & Kostova, 2019; Wickert, Scherer & Spence, 2016). This gap between CSR performance and CSR reporting is commonly referred to as CSR decoupling. The organizational hypocrisy concerning CSR (Cho et al., 2015) could make it hard

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for investors and other stakeholders to examine the real firm engagement in CSR (García-Sánchez et al., 2020).

Furthermore, literature has not only investigated the mere existence of this CSR decoupling but also researched the consequences of CSR decoupling. For example, the study by Garcia-Sánchez et al. (2020) examined the effects of CSR decoupling on market-based factors analysts forecast errors, costs of capital, and a firm’s access to finance. They find that a bigger gap between CSR disclosure and actual CSR performance leads to higher forecast errors, a higher cost of capital, and reduced access to finance. In their study, Hawn and Ioannou (2016) show that CSR decoupling impacts firm value. Resulting in firms not reaping the benefits of their CSR actions to their fullest potential. Also, some research examined factors that could lead to CSR reporting and CSR decoupling, like institutional voids (Marano et al., 2017, Tashman et al., 2019), regulatory environment (Delmas & Burbano, 2011), and CEO overconfidence (Sauerwald & Su, 2019).

Concerning the monitoring of a firm’s CSR engagement by external stakeholders’ scholars find that external monitoring, for example by analyst coverage, affects CSR engagement (Hinze & Sump, 2019) and CSR decoupling (Garcia-Sánchez et al., 2020). Sauerwald and Su (2019) find that internal governance mechanisms such as outside director expertise and outside director stock ownership moderate the relationship between CEO overconfidence and CSR decoupling. Hence internal corporate governance mechanisms, such as a board of directors, could be a factor that influences a firm’s engagement in CSR decoupling. The relationship between corporate governance characteristics and the firm’s triple bottom line or CSR engagement has been studied (Hussain, Rigoni & Orij, 2018). Among which the effect of the instalment of a CSR committee on CSR engagement or disclosure (Helfaya & Moussa, 2017; Hussain et al., 2018; Liao, Luo & Tang, 2015), which positively impacts firms’ social, environmental and sustainability performance or disclosure (Helfaya & Moussa, 2017; Hussain et al., 2018; Liao et al., 2015; Walls, Berrone & Phan, 2012) and sustainable reporting quality (Amran, Lee & Devi, 2014). Additionally, Fu, Tang & Chen (2020) investigated the influence of the presence of such a committee in the relationship between the instalment of a CSO and CSR. They also highlight the importance of certain aspects of executives, as well as the fact that specialized committees and executives can be battling for the same resources. The characteristics of executives could be impacting the working of corporate governance mechanisms like the instalment of a CSR committee. In particular the characteristics of the CEO. Literature indicated that CEO duality for instance has an impact on corporate governance

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mechanisms (Hussain et al., 2018; Walls et al., 2012). Combined with the impact of CEO characteristics on CSR, the moderating effect of one particular CEO characteristics, CEO’s educational specialization in MBA, on the effect of a CSR committee on CSR decoupling will be investigated as well.

Given the above-mentioned interest in and impact of CSR and CSR decoupling along with the possible impact of corporate governance mechanisms, combined with the fact that research has not shed much light on factors that could lead to CSR decoupling, this paper seeks to answer the following research question:

What is the effect of the existence as well as the composition of a CSR committee as part of the board of directors on CSR decoupling and will this effect be impacted by CEO’s educational specialization?

The results show that both the presence of a CSR committee as well as an increase in independence increases a firm's engagement in CSR decoupling. Whereas, an increase in the size of the committee leads to lower engagement in CSR decoupling. The presence of women on the committee is not significantly related to CSR decoupling. The results show that CEO’s educational specialization in MBA moderates these relationships.

This paper will contribute to the existing literature in a couple of ways. First of all, this research will shed some light on a factor that could influence the decision of firms to engage in CSR decoupling. Secondly, this research could give another insight into the monitoring role of the board of directors, in particular a subcommittee of the board of directors, namely the CSR committee. Where other papers might have investigated the contribution of a CSR or sustainability committee to CSR disclosure and engagement (Helfaya & Moussa, 2017; Hussain et al., 2018; Liao et al., 2015; Walls et al., 2012) they have not thoroughly investigated the impact of the existence as well as the composition of a CSR committee on CSR decoupling. Immediately bringing us to a third contribution that this study makes namely studying not only the effect of the presence of a CSR committee but also investigating the impact of the composition of this committee. Additionally, contrary to most studies covering the existence of a CSR committee this study will not only look at one aspect of CSR but look at the different aspects of CSR. Lastly, this paper contributes to the current literature by showing whether CEO characteristics can have a moderating effect on the relationship between the existence and composition of a CSR committee and the CSR decoupling undertaken by firms. Hereby, trying to advance the literature on the effect that executives can have on CSR decoupling.

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The remainder of this study is structured as follows. In the second section, an overview of the literature is presented. The third section will provide an explanation of the methodology used. Followed by a presentation of the results in section four. Section five discusses the results. The last section concludes, discusses limitations, and presents directions for future research.

2. Literature review

The literature review is divided into subsections about the concept of CSR, Corporate Governance, CSR decoupling, and CEO characteristics. Subsequently, the hypotheses about the effect of the existence and composition of a CSR committee and the possible moderating impact of the CEO’s educational specialization in MBA are developed and discussed.

2.1 Corporate governance and Corporate Social Responsibility

The represented definitions of CSR in Table 1 have in common that the responsibilities of the firm go beyond the interest of the shareholders to include the interests of other stakeholders as well. Companies face increasing pressure from different stakeholders to become sustainable (Hussain et al., 2018). Not only is the customer attention towards and the customer market for green products and services expanding (Delmas & Burbano, 2011). Also, the interest that the investors are showing towards CSR is increasing, for example when choosing which firms to invest in (Di Giuli & Kostovetsky, 2014; El Ghoul et al., 2011; Elliot et al., 2014).

Agency theory posits that a conflicting relationship between managers and stakeholders exists and that managers might exploit the power they have and behave opportunistically (Hussain et al., 2018; De Villiers, Naiker & Van Staden, 2011). Therefore, it could be desirable to monitor these agents to reduce the conflict of interest between agents and principals (Hussain et al., 2018). The board of directors can have two functions within a company (De Villiers et al., 2011; Hillman & Dalziel, 2003). The first function is the monitoring role by which the board can make sure the agent acts in line with shareholder interests, as is proposed by the agency theory (De Villiers et al., 2011; Hillman & Dalziel, 2003; Liao et al., 2015). The second function of the board is suggested by the resource-based view and encompasses enabling access to resources, such as information (De Villiers et al., 2011; Hillman & Dalziel, 2003). It has been shown that monitoring by the board affects CSR (De Villiers et al., 2011) as well as the firms CSR decoupling activities through its moderating effect on CEO overconfidence (Sauerwald & Su, 2019). Corporate governance structure usually can be described by the board independence and board composition (Hussain et al., 2018). This board independence and board composition

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are composed out of variables such as the number of independent directors, percentage of non-executive directors, director ownership, and gender diversity (measured by the number of women on the board) (Amran et al., 2014; Hussain et al., 2018). Board independence and gender have been positively related to firm engagement and disclosure of CSR (Helfaya & Moussa, 2017; Hussain et al., 2018; Liao et al., 2015).

Table 1. Concepts and definitions.

Concept Definition

CSR ‘Corporate social responsibility reflects the extent to which a firm actively engages in social initiatives in response to a wide range of stakeholder interests’ (Tang et al., 2015, p1338)

‘CSR can be defined as actions that appear to further some social good, beyond the interest of the firm and that which is required by law’ (Husted et al., 2016, p2051; Wickert et al., 2016, p1169; Jamali et al., 2019, p 458; McCarthy, Oliver & Song, 2017, p280; Al-Shammari, Rasheed, & Al-Shammari, 2019, p107)

CSR decoupling ‘The gap between CSR performance and CSR disclosure’ (García-Sánchez et al., 2020; Tashman et al., 2019)

Greenwashing ‘Is the act of misleading consumers regarding the environmental practices of a company or environmental benefits of a product or service’ (Delmas & Burbano, 2011, p.66; Ghitti, Gianfrate, & Palma, 2020, p2)

Silent Greens Firms with good environmental performance that do no communicate about their environmental performance (Delmas & Burbano, 2011, p.67)

Another corporate governance mechanism is the existence of specialized board committees (Helfaya & Moussa, 2017). The instalment of a specialized board committee can help in the decision-making process (Fu et al., 2020). The board of directors may create a board committee that is focussing on issues regarding CSR or sustainability (Fu et al., 2020; Walls et al., 2012). The term CSR committee can have a variety of names, therefore in the current study, the term CSR committee is used as an overarching term that encompasses committees with

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names like corporate social responsibility, environmental, social responsibility, sustainability, corporate ethics, health and safety, sustainable development committee (Helfaya & Moussa 2017; Liao et al., 2015). The instalment of a sustainability committee might help draw attention within the firm towards the sustainability issues (Fu et al., 2020; Greening & Gray, 1994; Walls et al., 2012). Fu et al. (2020) argue that more attention received by sustainability issues could lead to more resources and managerial support that is given to the issues. This in turn could lead to more desirable outcomes for the issues at hand.

2.2 CSR decoupling

Literature has shown that firms can undertake internal or external CSR actions as a response to the pressure of being responsible and transparent (García-Sánchez et al., 2020; Hawn & Ioannou, 2016). Internal actions can include the actual implementation of policies (García-Sánchez et al., 2020; Hawn & Ioannou, 2016) also described as CSR walk (Wickert et al., 2016). External actions include and usually focus on communication by the firm about their CSR (García-Sánchez et al., 2020; Hawn & Ioannou, 2016), like CSR reporting, which others might refer to as CSR talk (Wickert et al., 2016). As mentioned in Table 1 the term CSR decoupling is used to refer to the gap between CSR disclosure and CSR performance (García-Sánchez et al., 2020; Tashman et al., 2019). Firms can engage in greenwashing or be silent greens, in both situations, a discrepancy between CSR reporting and performance exists which could be damaging to the firm concerning market reaction (García-Sánchez et al., 2020; Hawn & Ioannou, 2016).

Stakeholders face information asymmetry with regard to CSR. CSR reporting could help alleviate this information asymmetry (García-Sánchez et al., 2020; Tashman et al., 2019) and help companies gain legitimacy (Hawn & Ioannou, 2016). It has been theorized that managers engage in CSR decoupling to adhere to stakeholder pressures that are not in line with each other (Crilly et al., 2012; García-Sánchez et al., 2020). For example, pressure from consumers and investors to be environmentally friendly (Delmas & Burbano, 2011). It could also be argued that executives engage in CSR decoupling to present a more positive picture of the company and to protect their self-image (Sauerwald & Su, 2019). This is in line with agency theory stating that managers act in their interest instead of the interest of the shareholders (De Villiers et al., 2011). The opportunity for companies to communicate more positively about for example their environmental performance is present given the few legal and regulatory obligations surrounding CSR disclosure (Delmas & Burbano, 2011). In light of the possible conflicting

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interests and managers acting in their own interest, the next section will discuss the impact of CEO characteristics on firm-level decisions.

2.3 CEO characteristics

The widely used upper echelons theory states that firm-level strategic decisions are influenced by the senior executives (Al-Shammari et al, 2019; Fu et al., 2020; Hambrick & Mason, 1984; Manner, 2010). Not only are the firm-level decisions influenced by executives, but also the attention paid to certain issues depends on the interpretation of the senior executives (Fu et al., 2020). As Hambrick and Mason (1984) indicate, organizational outcomes such as strategies can be seen as reflections of the values and cognitive biases of the organization’s powerful actors. Given that the CEO is regarded as a key decision-maker within the firm (Al-Shammari et al., 2019; Huang, 2013) the cognitive biases and values of the CEO will, according to the upper echelons theory, impact the firm’s outcomes, such as strategic decisions. Some observable variables that are indicating these values and cognitive biases are age, functional tracks, career experience, and education among others (Hambrick & Mason, 1984).

It has been argued that CSR is a strategy (Al-Shammari et al., 2019; Huang, 2013; McCarthy et al., 2017). Following the reasoning of the upper echelons perspective, CEO characteristics could therefore have an impact on CSR. Not surprisingly, the relationship between CEO characteristics and a firm’s engagement in CSR as well as CSR performance has been investigated in the past (Al-Shammari et al., 2019; Huang, 2013; Lewis, Walls & Dowell, 2014; Manner, 2010; McCarthy et al., 2017; Petrenko et al., 2016; Tang et al., 2015). Literature has investigated whether a CEO’s demographic characteristics such as gender (Huang, 2013; Manner, 2010), age (Huang, 2013), and education (Huang, 2013; Lewis et al., 2014; Manner, 2010) have an impact on the firms CSR performance.

Before heading to the following section, which discusses the hypotheses regarding the effect of the existence and composition of the CSR committee on CSR decoupling, an overview of the literature is presented in Table 2.

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Table 2: Overview of literature

Study Independent variable (results in

parenthesis)

Dependent variable (s)

CSR measure Sample Country Theory

Al-Shammari et al.(2019)

CEO Narcissism (+) CSR KLD 134 CEO’s for the period

2008-2013

US Upper echelon theory

Amran et al. (2014)

Existence of CSR committee (+), Board size (ns),

Board independence (ns), Board Gender diversity (ns)

Sustainability Reporting Quality (SRQ)

Content analysis of sustainability reports. 113 companies Australia, New Zealand, China, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, Japan

Legitimacy theory and Resource-Based view

Fu et al.(2020)

CSO presence (+, -) CSR CSiR

Standardized number of strengths and concerns based on KLD scores on the different dimensions

S&P 500 firms for the period 2005-2014 US Upper echelons perspective, Attention-based view García-Sánchez et al. (2020)

CSR decoupling (+, +, -) Analyst forecast errors,

cost of capital and access to finance

KLD CSR performance data, Bloomberg ESG disclosure data

7681 firm-year observations for the period of 2006-2015

US Stakeholder theory,

disclosure theory Ghitti et

al., 2020

Board size (-),

Board Independence (+), Gender diversity

Greenwashing ESG - NGW ranking Sample of largest 500 firms for the period 2012-2017

US Agency theory, information assymetry theory Helfaya & Moussa, 2017

CSR board strategy(+) , Board CSR orientation (independence and gender diversity) (+), CSR Committee, issuance of stand-alone CSR report (+)

Corporate environmental sustainability disclosure (CESD)

Disclosure index based on GRI sustainability reporting guidelines

FTSE 100 companies UK Legitimacy theory and Resource dependence theory

Huang, 2013

CEO Gender (+), CEO age (ns), CEO tenure (+), CEO educational specialization(+),

CEO nationality (ns)

Consistency in CSR performance

CSR ratings 661 firms between 2005 and 2010

International Stakeholder theory

Hussain et al., 2018

Board size (+), Board

independence (+), CEO duality (-), % of women on the board (+(-), Board activity (+), Sustainability committee (+)

Sustainability performance

Content analysis of sustainability reports 152 reports for the period 2007 to 2011

US Agency theory and

Stakeholder theory Ienciu et al. (2012) Board size (ns), CSR committee (+), Board independence (+) Environmental reporting

Based on archival data Petroleum businesses for year 2009

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11 Lewis et

al., 2014

CEO educational background (MBA degree) (+), CEO tenure (new CEO) (+)

Environmental disclosure

Carbon Disclosure Project (CDP) 2157 firm-year observations for the period 2002 till 2008

US Institutional theory, Upper echelon theory Liao et al.,

2015

Gender diversity (+), Board independence (+), environmental committee (+)

Greenhouse gas emission disclosure

Dummy variable taking value 1 if the company participated in CDP.

329 companies, 2011 UK Stakeholder Theory Manner,

2010

CEO education (-),

CEO functional experience (+), CEO gender (+),

CEO compensation (-)

Corporate Social Performance

KLD Research Analytics CSP ratings Firms that have been rated by KLD in 2006

US Upper echelon theory

McCarthy et al., 2017

CEO confidence (-) CSR Overall CSR score calculated by subtracting the number of CSR concerns from the CSR strengths identified by KLD.

2138 companies US Risk management

research Petrenko et

al. (2016)

CEO narcissism (+) CSR KLD measure of CSR Fortune 500 CEOs 1997-2012

US Upper echelons &

agency theory Rao et al. (2012) Board independence (+), Institutional ownership (+), Board Size (+), Women on Board (+) Environmental Disclosure

OSIRIS database 96 of the largest Australian firms listed on the

Australian Stock Exchange

Australia Agency Theory

Sauerwald & Su (2019) CEO overconfidence (+, mitigated by characteristics of outside directors)

CSR decoupling Content analysis of CSR reports and KLD database

S&P 500 firms between 2006-2014

US Symbolic management,

Cognitive biases. Tang et al.

(2015)

CEO Hubris (-) CSR strength/ CSR concern

KLD measure of CSR S&P 1500 firms 2001-2010 US Upper echelons & stakeholder theory Tashman

et al. (2019)

Home country institutional voids (+)

CSR decoupling ESG ratings from MSCI IVA database for CSR performance.

CSR reporting by content analysis of reports.

93 MNE’s from 15 countries in the period 2005-2012

Brazil, China, Egypt, Hong Kong, India, Malaysia, Mexico, Republic of Korea, Russians Federation, Singapore, South Africa, Taiwan, Thailand, Turkey, UAE

Neo – institutional theory

De Villiers et al. (2011) Director independence (+), Board size (+) Environmental performance KLD measure of environmental performance 1216 US publicly traded firms, 2003-2004 US Agency theory, Resource dependence theory Walls et al. (2012)

Environmental committee (+) Environmental performance

KLD scores S&P firms in the primary and manufacturing industries from 1997-2005.

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12 2.4 Hypotheses

2.4.1 CSR committee. As discussed earlier the presence of a CSR committee could

generate more attention towards CSR and lead to more desirable outcomes (Fu et al., 2020). Given the economic consequences of CSR decoupling, it can be imagined that the desired outcome would be less CSR decoupling. In line with this argumentation recent literature has concluded that the existence of a CSR committee on the board is a signal of commitment and orientation of the board towards CSR (Amran et al., 2014; Hussain et al., 2018). Both insignificant, as well as positive associations between the existence of a CSR/ sustainability committee and sustainability performance (Hussain et al., 2018), environmental performance (Liao et al., 2015; Walls et al., 2012), social performance, and the level as well as the quality of disclosure (Amran et al., 2014; Helfaya & Moussa, 2017; Ienciu, Popa, & Ienciu, 2012; Liao et al., 2015), has been shown. Given that literature has argued that a CSR committee is positively associated with CSR performance and engagement as well as the likelihood of disclosing information along with the quality of this reporting, a positive impact on CSR decoupling is expected. A positive impact entailing a smaller gap between CSR disclosure and CSR performance.

Next to a CSR committee drawing attention to the issue of CSR another mechanism could be at play as well. Internal corporate governance mechanisms such as a CSR committee on the board of directors could potentially lower the ability of CEO overconfidence to be reflected in CSR decoupling in the same manner as characteristics of outside directors did as shown in the study by Sauerwald and Su (2019). In line with the mechanisms explained in the previous section the following association is hypothesized:

H1: The presence of a CSR committee will lead to lower CSR decoupling

2.4.2 CSR committee size. According to Hussain et al. (2018), an often-investigated

aspect of corporate governance structure is board size, and results concerning its relationship with sustainability performance have been mixed. They also mention that in comparison with larger boards, smaller boards are less diversified, which might impact the quality of advice given by the board. On the other hand, it is argued that larger boards are less effective in monitoring, controlling, and decision making (Amran et al., 2014; Rao, Tilt & Lester, 2012; Walls et al., 2012). Furthermore, Liao et al. (2015) argue that a larger and more diversified board is more likely to provide better disclosure. The underlying rationale being that a larger, more diversified board has a broader and different range of expertise. By extension therefore

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representing a variety of stakeholders. Additionally, Walls et al. (2012) showed that board size was positively associated with environmental concerns. Extending the aforementioned logics to the CSR committee leads to the belief that CSR committee size might be related to a firm’s engagement in CSR decoupling, resulting in the following hypothesis:

H2: An increase in the size of the CSR committee will increase the amount of CSR decoupling a firm engages in.

2.4.3 CSR committee independence. A distinction between dependent and

independent directors can be made. Independent directors can be described as nonexecutive directors that do not have a financial or contractual relationship with the firm (Helfaya & Moussa, 2017). Research has suggested that a higher share of independent directors on the board results in a higher level of monitoring (De Villiers et al., 2011). From an agency perspective, it has been argued that independent directors are better able to effectively monitor and control management (Hussain et al., 2018; Liao et al., 2015). The independent directors are not involved in the day-to-day business and for their future career are not dependent on the CEO leading to the CEOs having less power over independent directors (De Villiers et al., 2011). In addition, it is argued that independent directors due to a lack of financial interests in the company and diverse backgrounds possess a more stakeholder-oriented view (Liao et al., 2015). Extending to this, it has been argued that due to independent directors being external to the organisation they have a responsibility towards a larger audience and face higher reputational costs (Amran et al., 2014; Hussain et al., 2018). Not surprisingly literature found a positive effect of a more independent board on sustainability performance (Hussain et al., 2018) and environmental performance (Rao et al., 2012). Also, it is argued that a more independent board is associated with a higher level of disclosure. Whereas Amran et al. (2014) find a non-significant relationship with sustainability reporting quality, Helfaya & Moussa (2017) showed a positive effect of board independence on corporate environmental sustainability reporting quality. Extending this logic to the members of the CSR committee leads to the following hypothesis:

H3: More independent directors on the CSR committee will lead to less CSR decoupling.

2.4.4 CSR committee gender diversity. One measure of the diversity of the board can

be the number of female directors (Hussain et al., 2018). Literature has indicated that the presence of females on the board is positively related to an orientation towards social

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responsiveness (Amran et al., 2014). It has been argued that in comparison with men women are more sensitive to social issues and more stakeholder-oriented (Amran et al., 2014; Helfaya & Moussa, 2017; Liao et al., 2015;). In line with this argumentation, a positive connection between the number of female directors and CSR (Hussain et al., 2018) or environmental performance (Rao et al., 2012) is found. Literature has argued that women differ from men in terms of background, education, career experiences, communication styles, and personality (; Liao et al., 2015) hence bringing different values and opinions into the board (Helfaya & Moussa, 2017).

In addition to these arguments, it has been reasoned that having more women on the board has a positive impact on the amount and quality of CSR disclosure. Liao et al. (2015) find that increased board gender diversity positively impacts the tendency to disclose. On the other hand, Ghitti et al. (2020) found no significant relationship between female representation on the board and greenwashing. The results with regard to reporting quality are mixed. Whereas Amran et al. (2014) have found no significant association between higher female representation and sustainability reporting quality, Helfaya & Moussa (2017) found a positive relationship between higher female representation and corporate environmental sustainability disclosure quality. Given the above-mentioned findings, the female representation is interesting to study and the following relationship is expected:

H4: More women on the CSR committee will lead to less CSR decoupling

2.4.5 The moderating role of CEO’s educational specialization. A relationship

between CEO demographic and psychological characteristics and a firm’s engagement in CSR as well as CSR performance has been investigated in the past (Al-Shammari et al., 2019; Huang, 2013; Lewis et al., 2014; Manner, 2010; McCarthy et al., 2017; Petrenko et al., 2016; Tang et al., 2015).

Literature has found that a female CEO and CEO narcissism are positively associated with CSR (Al-Shammari et al., 2019; Manner, 2010; McCarthy et al., 2017; Petrenko et al., 2016) and that CEO hubris and CEO confidence are negatively associated with CSR (McCarthy et al., 2017; Tang et al., 2015). Next to its effect on CSR, CEO overconfidence has also been linked to CSR decoupling by Sauerwald and Su (2019) who find that CEO overconfidence is related to a decoupling between CSR reporting and CSR performance.

Concerning education, the results are rather mixed. Huang (2013) found that firms with CEO’s with educational specializations such as MBA or MS have a higher CSR performance.

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In accordance with that finding, Lewis et al. (2014) find a positive association between CEOs with an MBA degree and the firm’s environmental disclosure. On the other hand, Manner (2010) found that a bachelor’s degree in humanities has a positive impact on CSR performance as well. Whereas a bachelor’s degree in economics is negatively related to CSR performance What all the studies agree upon is the fact that the education of the CEO has an impact on CSR. Given the importance of executive’s characteristics in firm decisions and the aforementioned effects of CEO characteristics on CSR, the moderating impact of one of these characteristics, namely CEO’s educational specialisation in MBA, on the effect of the existence and composition of a CSR committee on CSR decoupling is studied.

A CEO having an MBA degree is positively associated with CSR (Huang, 2013; Lewis et al., 2014). Having a CEO with this certain educational type could lead to even more attention being given to the issue of CSR and CSR decoupling therefore it is expected that this will strengthen the effect of a CSR committee on lowering CSR decoupling.

H5a: Having a CEO with an MBA degree will strengthen the relationship between the presence of a CSR committee and a lower level of CSR decoupling.

From an agency perspective the larger the size of the board the less effective the board is in monitoring, controlling, and decision making (Hussain et al., 2018; Liao et al., 2015). In the relationship between the size of the CSR committee and the level of CSR decoupling the agency perspective has been followed to draw the hypothesis on. The studies of Huang (2013) and Lewis et al. (2014) indicate a CEO having an MBA degree is positively related to the CSR of the firm. This signals that the CEO is more inclined to engage in CSR in case he/she has one of these degrees, entailing that they have an interest in CSR. The reasoning of the agency theory was that smaller boards are more effective in monitoring, however monitoring in order to get the interest aligned seems less pressing when the interest of the CEO is already more focussed on CSR. Hence, it is expected that the relationship between the number of members on the CSR committee and a higher level of CSR decoupling will be weakened by having a CEO that has an MBA degree.

H5b: Having a CEO with an MBA degree will weaken the relationship between the size of the CSR committee and a higher level of CSR decoupling a firm engages in.

As previously mentioned, the agency theory posits that agents act in their own interests, instead of in the interest of the principals, the shareholders (Hussain et al., 2018; De Villiers et

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al., 2011). The board of directors has a monitoring function. By this monitoring function the board will try to make sure that the agent is acting in line with the interests of the shareholder (Fu et al., 2020; Hillman & Dalziel, 2003; Liao et al., 2015; Sauerwald & Su; 2019). A higher share of independent directors will enhance the monitoring capabilities of the board of directors (De Villiers et al., 2011), therefore it was expected that a higher share of non-executive directors on the CSR committee would lead to a positive monitoring effect and hence to less CSR decoupling. A CEO that has an MBA degree is positively related to CSR (Huang, 2013; Lewis et al., 2014). So, it can be expected that they have more interest in CSR related issues. A CEO that has more interest in CSR related issues has interests that are more aligned with the shareholders, possibly reducing the impact of monitoring by the CSR committee. This leads to the following hypothesis:

H5c: Having a CEO with an MBA degree will weaken the relationship between the number of independent directors on the CSR committee and a lower level of CSR decoupling.

It has already been established that the presence of more female directors on the board of directors has been positively associated with CSR (Hussain et al., 2018) and CSR disclosure (Liao et al., 2015), given that women are more attentive to social responsibility issues. Combining this with a CEO with an MBA degree, which is positively related to CSR could lead to additional attention being paid to CSR and hence empowering the effect of women drawing the attention to social responsibility issues.

H5d: Having a CEO with an MBA degree will strengthen the relationship between the presence of women on the CSR committee and a lower level of CSR decoupling.

3. Methodology

3.1 Data collection and sample

Data is collected from multiple databases. The data regarding firms' CSR performance is collected from the Thomson Reuters EIKON database, whereas data regarding CSR disclosure is collected from the Bloomberg database. The information about the board of directors, the existence of a CSR committee, the details about the directors taking a seat on the CSR committee, and CEO characteristics are retrieved from the BoardEx database. Additionally, the WRDS database provided information regarding the education of the CEO. The Worldscope database is consulted for the financial data of the firms. Lastly, the data regarding the governance of the firm is collected from Thomson Reuters Asset 4 and Thomson Reuters Eikon.

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After matching the data from the abovementioned sources, the firms that were missing any required information were removed. Resulting in a final sample of 7990 firm-year observations from the period of 2006-2017.

3.2 Variables

3.2.1 CSR Decoupling. Previous literature has operationalized CSR decoupling as the

gap between external and internal CSR actions, also referred to as CSR disclosure and CSR performance (García-Sánchez et al., 2020; Hawn & Ioannou, 2016; Tashman et al 2019). A positive gap would signal a firm that is using the greenwashing tactic, meaning they report more positively about CSR than the actual implementation of these policies (García-Sánchez et al., 2020). On the other hand, silent greens would show a negative gap, performing better than they actually report (García-Sánchez et al., 2020). Given that literature has indicated it takes at least one year for CSR performance to translate back to CSR disclosure in this study the gap is operationalized as the absolute difference between current year CSR reporting and last year’s CSR performance (García-Sánchez et al., 2020; Hawn & Ioannou, 2016). Given the way CSR decoupling is operationalized a higher score on the CSR decoupling variable means that firms engage more in CSR decoupling (García-Sánchez et al., 2020).

3.2.2 CSR Committee. In line with previous literature, the term CSR committee is used

as an overarching term that encompasses committees with names like corporate social responsibility, environmental, social responsibility, sustainability, corporate ethics, health and safety, sustainable development committee (Helfaya & Moussa 2017; Liao et al., 2015) In line with the approach of Fu et al. (2020) all committee names with the following words in their name will be selected as CSR committee: Corporate social responsibility, Sustainability, Sustainable, Responsibility, Ethics, Environment, Social Responsibility, Corporate Ethics, Environmental, Sustainable development, Health and Safety. Consistent with previous studies (Fu et al, 2020; Hussain et al., 2018; Liao et al.,2015) the presence of a particular committee in this case a CSR committee on the board of directors will be measured with a dummy variable taking the value one if a CSR committee is present and zero otherwise. Once the presence of the CSR committee has been established the committee size will be determined by the number of members on this committee. The independence of the committee members will be proxied by their classification as Non-Executive Directors. Once determined whether the members are independent, CSR committee independence will be measured by the ratio of independent members over the total amount of members (Fu et al., 2020; Hussain et al., 2018; Liao et al.,

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2015). The gender diversity within the CSR committee will be measured as the percentage of female directors present in the CSR committee, in congruence with the way literature proxies gender diversity (Hussain et al., 2018; Liao et al., 2015).

3.2.3 CEO’s educational specialization. CEO educational specialization will be

measured with a dummy variable taking one if the CEO has an MBA and zero otherwise. The choice for MBA as an educational degree follows from the fact that literature (Huang, 2013; Lewis et al., 2014) has found that a CEO having an MBA has a positive impact on CSR.

3.2.4 Control variables. Next to the dependent and independent variables, the

following control variables will be used. Firstly, firm performance measured by ROA will be controlled for, given that it might impact CSR decoupling (Ghitti et al., 2020; Graafland & Smid, 2016; Sauerwald & Su, 2019). On the one hand, literature claims that more profitable companies find it easier to implement their CSR policies (Graafland & Smid, 2016). On the other hand, it is argued that more profitable firms would find it easier to survive shocks from damage to their reputation, and therefore it is positively related to CSR decoupling. (Delmas & Burbano, 2011; Ghitti et al., 2020; Graafland & Smid, 2016). Secondly, the presence of slack resources proxied by the ratio of current assets to current liability will be controlled for, since it might influence CSR decoupling by providing liquidity and opportunity to invest in CSR (Graafland & Smid, 2016; Tashman et al., 2019). Thirdly, the control variable R&D intensity measured by the ratio of R&D expenditures to sales will be added, (García-Sánchez et al., 2020; Hussain et al., 2018; Tashman et al., 2019) as it is argued that innovative firms might have a higher ability to improve CSR performance (Tashman et al., 2019). Fourthly, firm size proxied by the natural logarithm of total assets (Graafland & Smid, 2016; Hussain et al., 2018; Sauerwald & Su, 2019) is controlled for. Larger firms are more visible than smaller firms, thereby attracting more attention (Delmas & Burbano, 2011; Sauerwald & Su, 2019; Tashman et al., 2019) and pressure regarding their CSR initiatives (Tashman et al., 2019). Additionally, larger companies compared to smaller companies are often more formally organized and possess more experience which better enables them to implement CSR policies (Graafland & Smid, 2016).

Next to controls regarding the financial position of the firm, the following variables will be controlled for in terms of corporate governance mechanisms and CEO characteristics. Board independence will be controlled for since more independent boards, through monitoring more effectively, might be able to reduce CSR decoupling (Sauerwald & Su, 2019). In this study

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board independence will also be operationalized as the ratio of independent directors to the total number of directors (Hussain et al.,2018; Sauerwald & Su, 2019). In addition to board independence, board size will be controlled for since it has been argued that larger boards are less effective monitors than smaller boards (Hussain et al., 2018; Sauerwald & Su, 2019).

The number of board meetings is used as a proxy for board activity (Hussain et al., 2018; Liao et al., 2015). The more active a board is the more diligent the board is believed to be (Hussain et al., 2018). Board activity has also been shown to improve social sustainability (Hussain et al., 2018). Therefore, this study will control for board activity proxied by board meetings. CEO duality might weaken the monitoring of the board and hence negatively impact CSR (Hussain et al., 2018). Lastly, industry will be controlled for as some industries might receive more attention than others (Delmas & Burbano, 2011; Fu et al., 2020; Ghitti et al., 2020).

3.3 Analysis Plan

In order to answer the research question, a random-effects regression will be conducted. First

for a sample of 7990 companies the effect of the existence of a CSR committee on CSR decoupling will be investigated. Including the moderating effect of the CEO’s educational specialization in MBA on this relationship. Thereafter, the effect of the composition of this CSR committee will be investigated on the subsample of observations for which a CSR committee is present. The next section will present the results of these analyses.

4. Results 4.1 Descriptive statistics

As previously mentioned, the final sample consists of 7990 observations from 50 countries, between the years 2006 and 2017. An overview of the number of observations per country is provided in Table 3. As can be seen from the descriptive statistics in Table 4, the mean of CSR decoupling is 24.721 indicating that the firms in this sample engage in CSR decoupling. Additionally, the mean of the CSR committee is 0.1265, entailing that from the 7990 firm-year observations in 1011 of the cases a CSR committee was present. The CSR committee size within this sample ranges from 0 to 13. As for the CSR committee independence, the number of independent members is ranging from 0 to 12 members. Regarding the gender diversity of the CSR committee, there are committees with 0 female members and the maximum number of women on the committee is 6. Lastly, the mean of the number of CEOs with an MBA degree is 0.006 meaning that 479 CEOs in the sample have an MBA degree.

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Table 3. Overview of the number of observations per country

Country Number of observations % of total observations

Argentina 1 0.01 Australia 64 0.8 Austria 10 0.13 Belgium 12 0.15 Bermuda 51 0.64 Brazil 1 0.01 Canada 878 10.99 Cayman Islands 1 0.01 Chile 4 0.05 China 16 0.2 Czech Republic 2 0.03 Denmark 2 0.03 Finland 2 0.03 France 122 1.53 Germany 40 0.5 Gibraltar 4 0.05 Guernsey 2 0.03 Hong Kong 36 0.45 Hungary 7 0.09 India 25 0.31 Isle of Man 1 0.01 Italy 24 0.30 Japan 29 0.36

Korea Republic of (South Korea) 3 0.04

Luxembourg 12 0.15 Malaysia 10 0.13 Mauritius 1 0.01 Mexico 11 0.14 Netherlands 29 0.36 New Zealand 14 0.18 Norway 2 0.03

Papua New Guinea 1 0.01

Philippines 45 0.56 Puerto Rico 1 0.01 Republic of Ireland 13 0.16 Russian Federation 7 0.09 Singapore 14 0.18 South Africa 25 0.31 Spain 43 0.54 Sweden 37 0.46 Switzerland 43 0.54 Taiwan 25 0.31 Thailand 5 0.06 Turkey 4 0.05

United Arab Emirates 2 0.03

United Kingdom - England 158 1.98

United Kingdom - Scotland 11 0.14

United Kingdom - Wales 7 0.09

United States 6130 76.72

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The correlation matrix in Table 5 already sheds some light on the possible relations between CSR decoupling on the one hand and the existence and composition of the CSR committee on the other hand. The correlations between CSR decoupling and the existence and the size of the CSR Committee are not significant at the 5% level. Whereas the correlations between committee independence as well as the gender diversity of the CSR committee are significant at the 5 % level. Both correlations are positive, indicating that an increase in the number of women and the number of independent members on the committee will lead to a firm engaging more in CSR decoupling.

Table 4. Descriptive statistics

Variables N Mean Std. Dev. Min Max

CSR Decoupling 7990 24.721 19.820 0 92.89

CSR Committee 7990 0.127 0.332 0 1

Committee Size 7990 0.594 1.666 0 13

Committee Independence 7990 0.551 1.576 0 12

Committee Gender Diversity 7990 0.124 0.479 0 6

Return on Assets 7990 5.236 9.530 -64.04 34.84 Slack Resources 7990 2.308 2.562 0.122 24.384 R&D Intensity 7990 0.082 0.116 0 1.121 Size 7990 15.534 2.930 8.501 24.075 Board Independence 7990 0.006 0.074 0 1 Board Size 7990 10.254 2.551 5 18

Number of Board meetings 7990 8.311 3.525 4 27

CEO Duality 7990 0.385 0.487 0 1 MBA degree 7990 0.006 0.078 0 1 13 1.0 0 0 0

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22 12 1.0 0 0 0 0 .0 9 06 * 0 .0 0 0 0 11 1.0 0 0 0 0 .0 6 4 9 * 0 .0 0 0 0 -0 .0 6 39 * 0 .0 0 0 0 10 1 0.0 5 8 2 * 0 .0 0 0 0 -0 .0 0 7 5 0. 5 0 1 2 -0 .0 1 0 2 0 .3 6 3 0 9 1 -0.0 3 31 * 0 .0 0 31 -0 .0 1 0 8 0 .3 3 31 -0 .0 1 1 2 0. 3 1 5 1 -0 .0 3 13 * 0 .0 0 5 2 8 1 -0.0 1 9 5 0 .0 8 1 1 0 .0 3 8 1 * 0 .0 00 6 -0 .0 8 8 4 * 0 .0 0 0 -0 .0 8 7 3 * 0 .0 0 0 0 -0 .0 0 02 0. 9 8 7 5 7 1 0.0 0 1 0 0 .9 2 6 2 - 0.2 6 6 7 * 0 .0 0 0 0 -0 .0 0 74 0. 5 1 1 1 0 .0 0 6 5 0 .5 5 9 3 -0 .0 0 7 6 0. 4 9 7 0 -0 .0 1 03 0. 3 5 6 4 6 1 -0.0 0 33 0. 7 6 5 6 -0 .0 1 4 0 0. 2 1 0 4 0 .0 1 5 0 0. 1 7 9 7 0 .0 0 3 4 0. 7 5 9 3 0 .0 4 1 5 * 0 .0 0 0 2 -0. 1 2 0 5 * 0 .0 0 0 0 -0 .0 9 2 6 * 0 .0 0 0 0 5 1 0.0 0 9 0 0. 4 1 8 9 0 .0 0 62 0 .5 7 8 3 0 .0 0 62 0. 5 7 8 5 -0. 0 1 3 0 0 .2 4 3 6 0 .0 3 7 3 * 0 .0 0 0 9 0. 1 0 0 8 * 0 .0 0 0 0 0 .0 2 65 * 0 .0 1 8 0 -0 .0 0 3 3 0 .7 6 9 1 4 1 0.7 6 8 9 * 0 .0 0 0 0 -0 .0 0 89 0. 4 4 3 3 -0 .0 0 12 0. 9 1 7 3 0 .0 3 1 7 * 0. 00 4 6 - 0.0 4 89 * 0 .0 0 0 0 0 .0 4 3 7 * 0 .0 0 0 1 0 .0 9 59 * 0 .0 0 0 0 0 .0 1 37 0 .2 2 1 9 0 .0 4 7 0 * 0 .0 0 0 0 3 1 0.9 8 9 0 * 0 .0 0 0 0 0 .7 5 3 8 * 0 .0 0 0 0 -0 .0 0 79 0. 4 8 2 0 -0 .0 0 1 5 0. 8 9 5 9 0 .0 3 7 2 * 0. 0 0 0 9 - 0.0 4 80 * 0 .0 0 0 0 0 .0 4 3 5 * 0 .0 0 0 1 0 .0 8 93 * 0 .0 0 0 0 0 .0 0 80 0. 4 7 3 8 0 .0 5 2 5 * 0 .0 0 0 0 2 1 0.9 3 7 0 * 0 .0 0 0 0 0 .9 1 9 3 * 0 .0 0 0 0 0 .6 7 8 5 * 0 .0 0 0 0 -0 .0 1 7 0 0. 1 2 8 9 0 .0 0 79 0 .4 8 0 4 0 .0 4 7 1 * 0. 0 0 0 0 -0 .0 5 64 * 0 .0 0 0 0 0 .0 4 8 0 * 0 .0 0 0 0 0 .0 5 1 6 * 0 .0 0 0 0 0 .0 0 11 0 .9 1 9 7 0. 06 5 0 * 0 .0 0 0 0 m atri x 1 1.0 0 0 0 .0 1 8 0 0 .1 0 8 4 0 .0 2 1 1 0 .0 5 88 0 .0 2 3 9 * 0 .0 3 2 5 0 .0 3 5 5 * 0 .0 0 1 5 0 .0 1 1 6 0. 3 0 1 4 -0 .0 3 2 7 * 0. 0 0 3 4 0 .0 0 2 3 0 .8 3 5 0 0. 0 9 9 9 * 0 .0 0 0 0 0 .0 1 4 5 0. 1 9 3 5 0 .0 8 55 * 0 .0 0 0 0 0 .0 0 05 0 .9 6 2 9 -0 .0 5 0 6 * 0 .0 0 0 0 Tab le 5 . Co rre latio n Va ria b les CS R De co u p lin g CS R Co m m it tee Co m m it tee S ize Co m m it tee In d ep en d en ce Co m m it tee Ge n d er Div ersity Re tu rn o n As se ts S lac k Re so u rc es R& D In ten sity S ize Bo ard In d ep en d en ce Bo ard S ize Nu m b er o f B o ard m ee ti n g s CEO Du ali ty

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In order to investigate the hypotheses developed in the literature review, a random-effects regression has been conducted. Table 6 presents the results of the random effects regression. Model 1 investigates the effect of the existence of a CSR committee on CSR decoupling. The coefficient is 3.017 and significant at the 1% level, providing evidence contradicting H1. In model 2 the moderating effect of the CEO having an MBA degree on the relationship between a CSR committee and CSR decoupling has been added. The coefficient for the CSR committee increases to 3.168 and is significant at the 1% level. This provides evidence in contradiction to H1 as well, leading to the rejection of H1.

The effect of the composition of the CSR committee on CSR decoupling is examined in model 3 - model 6. These models represent a regression conducted on a subsample of 1011 firm-year observations for firms that have a CSR committee. In model 3 the variables committee size, independence, and gender diversity are added. The coefficient of committee size is -3.225 and statistically significant at the 5 % level. Even though the result is significant the coefficient is the opposite of what is expected in H2, therefore no evidence in line with H2 is found. When the moderating effects of the CEO’s educational specialization in MBA are added in model 4 - model 6, the coefficients become -3.293, -3.294, and -3.256 respectively. These are significant at the 5% level. Given that the coefficients are the opposite of the expectation, H2 is rejected. Turning to committee independence the coefficient is 2.476, significant at the 10% level. When the moderating effect of CEO characteristics is added in model 4 – model 6, the coefficients become 2.608, 2.609, and 2.514 in the consecutive models. Even though the results are significant at the 10% level no evidence for H3 is found given that they are opposite of what is expected, therefore H3 is rejected

Gender diversity has a coefficient of 1.087 in model 3. When adding the moderating effects in models 4, 5, and 6 the coefficient slightly changes but remains positive and close to 1. In all the models the coefficient is not significant at either 1,5 or 10% level. Consequently, no evidence in support of H4 is found leading to H4 being rejected.

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Table 6. The effect of existence and composition of a CSR committee on CSR decoupling

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 CSR committee 3.017*** (0.853) 3.168*** (0.855) Committee Size -3.225** (1.426) -3.293** (1.421) -3.294** (1.421) -3.256** (1.424) Committee Independence 2.476* (1.459) 2.608* (1.455) 2.609* (1.455) 2.514* (1.458) Committee Gender Diversity 1.087 (0.880) 1.058 (0.877) 1.058 (0.876) 1.145 (0.879) CSR committee * MBA degree -15.617** (6.772) Committee Size * MBA degree -3.576** (1.454) Committee Independence * MBA degree -3.558** (1.443) Committee Gender diversity * MBA degree -11.910* (6.736) ROA -0.003 (0.026) -0.005 (0.026) 0.028 (0.084) 0.025 (0.084) 0.025 (0.084) 0.029 (0.084) Slack Resources 0.063 (0.087) 0.063 (0.087) -0.001 (0.246) 0.000 (0.246) 0.000 (0.246) 0.006 (0.246) R&D Intensity -1.994 (2.946) -2.022 (2.945) -5.600 (8.300) -4.942 (8.274) -4.948 (8.274) -5.159 (8.296) Size 0.463*** (0.095) 0.462*** (0.095) 0.280 (0.284) 0.251 (0.283) 0.251 (0.283) 0.263 (0.284) Board Independence -2.114 (3.355) -2.132 (3.354) -5.289 (5.715) -5.378 (5.700) -5.377 (5.700) -5.329 (5.709) Board Size 0.461*** (0.117) 0.466*** (0.117) 0.607* (0.360) 0.652* (0.359) 0.652* (0.359) 0.616* (0.360 Number of Board meetings -0.026 (0.071) -0.023 (0.071) -0.225 (0.219) -0.180 (0.219) -0.180 (0.219) -0.207 (0.219) CEO duality -1.114* (0.576) -1.129* (0.576) -0.904 (1.631) -1.038 (1.626) -1.038 (1.626) -1.017 (1.631) C 4.087 (22.997) 4.042 (22.991) 24.590* (12.813) 22.408* (12.942) 22.409* (12.941) 22.975* (12.980)

Industry Control Yes Yes Yes Yes Yes Yes

Country Control Yes Yes Yes Yes Yes Yes

R² 0.0003 0.0006 0.0092 0.0123 0.0123 0.0116

Observations 7990 7990 1011 1011 1011 1011

Standard errors are in parentheses. * statistically significant at the 10 % level, ** statistically significant at the 5% level, *** statistically significant at the 1% level.

Concerning the hypotheses on the moderating effect of CEO’s educational specialization in MBA on the relationship between the existence and composition of the CSR committee and CSR decoupling the results are represented in model 2, model 4, model 5, and model 6. Looking at the moderating effect on the relationship between the existence of the CSR committee and

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CSR decoupling it can be seen that the coefficient is -15.617 and was significant at the 5% level. Hence showing a significant moderating effect. It shows that CEO attainment of an MBA degree decreases CSR decoupling. When looking at the coefficients, it can be concluded that having an MBA degree results in a CSR committee lowering CSR decoupling (3.1687 – 15.617 = -12.449). These results provide evidence in support of H5a. In model 4 the coefficient of the moderating effect of CEO’s educational specialization in MBA on the effect of CSR committee size on CSR decoupling is -3.576 and is significant at the 5% level. Looking at the coefficients, having a CEO with an MBA degree leads to a sharper reduction in CSR decoupling (-3.293 +-3.576= -6.869) than when looking at the CSR committee size alone (-3.293). These results are not in line with H5b and therefore H5b is rejected. The coefficient of the moderating effect of a CEO’s educational specialization in MBA on the relationship between committee independence and CSR decoupling is -3.558 and significant at the 5% level. When attention is turned to the coefficients, it can be seen that having a CEO with an MBA degree moderate the relationship whereby increased committee independence leads to a decrease in CSR decoupling (2.609 + -3.558= -0.949) instead of an increase (2.609). This result does not provide evidence for H5c and therefore H5c is rejected. The effect of CEO characteristics on the effect of the number of women on the CSR committee is investigated in model 6. The coefficient is -11.910 and significant at the 10% level, however, the coefficient of gender diversity is not significant hence providing no evidence in support of H5d, and H5d is rejected.

4.3 Robustness check

To check the robustness of the results the same analyses are performed on the different dimensions of CSR. Concerning the environmental dimension, the results are resembling the results of the main analysis. When the social dimension is investigated, both the existence as well as the composition of the CSR committee are not significantly related to decoupling. Only when the moderating effect of the CEO’s educational specialization in MBA is added, the existence of a CSR committee would lead to less CSR decoupling. This effect is statistically significant at the 5% level. The results regarding the governance dimension also show that the presence of a CSR committee increases CSR decoupling. Additionally, female presence on the committee is significant and implying that an increase in females on the committee would result in more decoupling on that dimension. Overall, it seems that the results of the main analysis are mainly driven by the environmental dimension.

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Table 7. The effect of existence and composition of a CSR committee on environmental decoupling

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 CSR committee 3.143*** (1.023) 3.307*** (1.026) Committee Size -3.296** (1.575) -3.376** (1.568) -3.378** (1.568) -3.335** (1.571) Committee Independence 3.291** (1.614) 3.445** (1.607) 3.446** (1.607) 3.340** (1.610) Committee Gender Diversity 1.283 (0.970) 1.253 (0.966) 1.253 (0.966) 1.361 (0.968) CSR committee * MBA degree -17.007** (8.117) Committee Size * MBA degree -4.090** (1.601) Committee Independence * MBA degree -4.067** (1.590) Committee Gender diversity * MBA degree -16.160** (7.459) ROA -0.001 (0.031) -0.003 (0.031) 0.070 (0.970) 0.067 (0.092) 0.067 (0.092) 0.072 (0.0919) Slack Resources 0.085 (0.104) 0.086 (0.104) 0.084 (0.267) 0.083 (0.267) 0.083 (0.267) 0.092 (0.267) R&D Intensity -1.916 (3.538) -1.946 (3.537) -6.557 (9.177) -5.973 (9.134) -5.981 (9.133) -6.057 (9.155) Size 0.872*** (0.114) 0.871*** (0.114) 0.522* (0.312) 0.494 (0.311) 0.494 (0.311) 0.501 (0.311) Board Independence -7.343* (4.016) -7.362* (4.016) -9.136 (6.225) -9.224 (6.206) -9.223 (6.206) -9.176 (6.212) Board Size 0.584*** (0.140) 0.590*** (0.140) 0.759* (0.399) 0.811** (0.397) 0.812** (0.397) 0.772* (0.398) Number of Board meetings -0.050 (0.085) -0.047 (0.085) -0.139 (0.239) -0.085 (0.239) -0.085 (0.239) -0.113 (0.239) CEO duality -1.866*** (0.691) -1.882*** (0.691) -3.181* (1.804) -3.324* (1.797) -3.325* (1.797) -3.328* (1.802) C -25.779 (27.583) -25.832 (27.576) 7.378 (14.480) 6.088 (14.396) 6.089 (14.396) 6.689 (14.436)

R² 0.0000 0.000 0.0041 0.0061 0.0061 0.0058

Observations 7990 7990 1011 1011 1011 1011

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Table 8. The effect of existence and composition of a CSR committee on social decoupling

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 CSR committee -1.459 (1.006) -2.174** (0.986) Committee Size -1.948 (1.661) -1.976 (1.662) -1.976 (1.662) -1.942 (1.662) Committee Independence 1.394 (1.702) 1.446 (1.704) 1.446 (1.704) 1.386 (1.704) Committee Gender Diversity 0.341 (1.022) 0.331 (1.023) 0.331 (1.023) 0.328 (1.024) CSR committee * MBA degree -6.419 (8.093) Committee Size * MBA degree -1.390 (1.698) Committee Independence * MBA degree -1.383 (1.685) Committee Gender diversity * MBA degree 2.530 (7.901) ROA -0.039 (0.031) -0.045 (0.031) -0.024 (0.097) -0.025 (0.097) -0.025 (0.108) -0.024 (0.097) Slack Resources -0.173 (0.105) -0.016 (0.105) 0.107 (0.280) 0.108 (0.281) 0.108 (0.281) 0.106 (0.281) R&D Intensity 0.639 (3.431) 0.919 (3.427) -3.008 (9.675) -2.786 (9.683) -2.788 (9.683) -3.068 (9.685) Size 0.336*** (0.112) 0.419*** (0.111) 0.426 (0.328) 0.416 (0.329) 0.416 (0.329) 0.429 (0.329) Board Independence -7.672* (4.043) -4.622 (3.817) -9.260 (6.538) -9.303 (6.540) -9.303 (6.539) -9.255 (6.541) Board Size 0.585*** (0.136) 0.669*** (0.133) 0.580 (0.421) 0.596 (0.422) 0.596 (0.422) 0.577 (0.421) Number of Board meetings -0.017 (0.085) -0.060 (0.084) -0.308 (0.252) -0.290 (0.253) -0.290 (0.253) -0.316 (0.252) CEO duality -1.086 (0.678) -2.161*** (0.653) -2.029 (1.904) -2.079 (1.906) -2.080 (1.906) -2.006 (1.907) C -3.598 (27.191) -5.667 (10.116) 35.164** (15.298) 34.747** (15.316) 34.747** (15.316) 35.280** (15.315)

R² 0.0009 0.0010 0.0074 0.0067 0.0067 0.0074

Observations 7990 7990 1011 1011 1011 1011

(28)

28

Table 9. The effect of existence and composition of a CSR committee on governance decoupling.

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 CSR committee 2.114** (1.035) 1.838* (1.003) Committee Size -2.559 (1.881) -2.639 (1.868) -2.641 (1.868) -2.614 (1.872) Committee Independence 1.437 (1.922) 1.588 (1.909) 1.589 (1.909) 1.503 (1.913) Committee Gender Diversity 3.006** (1.163) 2.956** (1.155) 2.956** (1.156) 3.083*** (1.159) CSR committee * MBA degree -14.053* (8.338) Committee Size * MBA degree -3.922** (1.913) Committee Independence * MBA degree -3.895** (1.898) Committee Gender diversity * MBA degree -17.821** (8.811) ROA 0.026 (0.032) 0.020 (0.032) 0.085 (0.114) 0.084 (0.114) 0.084 (0.114) 0.089 (0.114) Slack Resources -0.012 (0.111) -0.009 (0.110) -0.401 (0.335) -0.398 (0.335) -0.398 (0.335) -0.392 (0.335) R&D Intensity -4.503 (3.474) -4.433 (3.425) -14.083 (10.938) -13.071 (10.869) -13.080 (10.869) -13.249 (10.893) Size 0.191* (0.115) 0.205* (0.113) 0.034 (0.377) -0.012 (0.375) -0.012 (0.375) -0.001 (0.376) Board Independence -9.597** (4.266) -7.749* (3.967) -16.035** (7.721) -16.114** (7.700) -16.113** (7.699) -16.076** (7.703) Board Size 0.233* (0.138) 0.276* (0.133) 0.621 (0.472) 0.666 (0.469) 0.666 (0.469) 0.633 (0.470) Number of Board meetings -0.076 (0.088) -0.075 (0.087) -0.565* (0.293) -0.519** (0.293) -0.519* (0.293) -0.540* (0.293) CEO duality -0.277 (0.694) -0.828 (0.660) -0.593 (2.145) -0.761 (2.130) -0.762 (2.130) -0.777 (2.136) C 42.210 (28.182) 33.812*** (10.236) 41.733** (16.915) 40.905** (16.774) 40.907** (16.773) 41.242** (6.600)

R² 0.0010 0.0008 0.0181 0.0148 0.0148 0.0164

Observations 7990 7990 1011 1011 1011 1011