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Digital archive of theses discussed at the University of Pisa


Thesis etd-03252023-094335

Thesis type
Tesi di dottorato di ricerca
Thesis title
Does the Board of Directors Impact on CSR? Evidence from the Banking Sector
Academic discipline
Course of study
tutor Prof. D'Onza, Giuseppe
tutor Prof.ssa Ferretti, Paola
  • background diversity
  • banks
  • board of directors
  • corporate social responsibility
  • CSR board committees
  • gender diversity
  • management control systems
Graduation session start date
Release date
The banking sector is a unique industry in society and its business today involves establishing new trends and strategies for addressing stakeholders' growing attention to Corporate Social Responsibility (CSR). Nowadays, searching for a detailed evaluation of environmental and social concerns is crucial for addressing long-term financial performance and to achieve the social and environmental goals recognized at a global level (Cormier et al., 2005; Forcadell & Aracil, 2017; Helfaya & Moussa, 2017; Abou Fayad et al., 2017).
Due to the important role that banking authorities recognise to the board of director in influencing banks’ behaviours (ESMA & EBA, 2021), this doctoral thesis aims to examine the crucial interface between the board of directors’ characteristics and CSR in the banking sector. Particularly, we take a closer look at how banks' CSR is taking shape, focusing on the board characteristics that could drive this process.
Given that, academic literature only recently focused on this field of research, impeding to overarch substantiation of the arguments in favour or against specific board characteristics in providing effects on CSR , we initially review the existing literature on the board of directors characteristics and CSR outcomes’ relationship in the banking sector to know the state of art of the field.
To this end, we perform a Structured Literature Review (SLR) - Massaro et al. (2016) - on a sample of 18 empirical papers published on peer reviewed journals (ABS). After developing a research protocol to minimise researcher bias in order to increase the replicability and the reliability of the study (Massaro et al., 2016), chapter are examined to answers three fundamental questions: 1) How has the literature on CSR of boards and banks developed so far? 2) What empirical evidence has emerged from the literature on boards and CSR in the banking sector? 3) In which directions could research evolve in the future?
We found that the Journal of Business Ethics currently acts as the primary publication medium for research on relationship between board characteristics and CSR outcomes in the banking sector. Among the literature field, the paper published in this journal can be considered "citation classic" as it has above-average CYPs (Jizi et al., 2014). From a methodological point of view, the field of research is characterized by papers that differ in terms of examined years, samples' numerosity and geographical location . In these papers, data are predominantly hand- collected from banks' annual reports, bank websites, corporate governance reports, CSR publications, and Management commentary or achieved from secondary databases (e.g., the Bloomberg database and Thomson Reuters Eikon database). From a contentual perspective, the immediate attention of researchers has been posed on board size, percentage of independent directors and percentage of women. Although the majority of the studies mainly show the positive effect of board size, gender diversity and independent directors on CSR outcomes, some contrasting findings require an in-depth analysis of the impact of these board characteristics, also analysing some board-level factors as moderators. Particularly, Galletta et al. (2022) suggest a list of board-level variables for future research (such as age, culture, nationality, education and which could indirectly influence the direct relationship between the percentage of women). Furthermore, only a few studies focus on foreign directors, political connections, educational background, age, and CEO duality calling for future research on these aspects. Some board characteristics are not yet studied (e.g., member education and experience). Regarding the CSR outcomes, the review shows the primary focus on CSR reporting and while only a few studies examine the impact of the board of directors on CSR performance and practices. However, more attention should be paid to CSR practices related to banks' management control systems for CSR. Indeed, identifying suggestions for future research, our literature review reveals that the relationship between the board of directors and Management Control Systems (MCSs - such as managers’ remuneration, controls’ policies and procedures and governance structures) for CSR has been undervalued and not in depth investigated, although the accounting literature recently recognized that MCSs could have a key role in the achievement of the socio-environmental goals (Ditillo & Lisi, 2014, 2016; Crutzen et al., 2018).
With the aim to identify the MCSs relevant for CSR goals for banks, we perform a multiple-case study, conducted at two significant Italian banks included in Corporate Knights Global 100 Index . In particular, the aim is to analyse MCSs relevant to achieve CSR objectives by adopting for the analyses the Malmi & Brown (2008)’s framework that refers to several tools of controls (such planning, cybernetic, remuneration systems, administrative controls and cultural controls). For this work, we collect data from interviews (with semi-structured questionnaire) and available banks’ documents on web site. Our investigation reveals that two examined banks broadly deploy a package of formal and informal management control mechanisms to support their efforts of performing socio-environmental goals and thus fostering a commitment to CSR. Specifically, we observed an extensive use of the five control mechanisms included in the Malmi & Brown (2008)’s framework, namely long term planning, cybernetic, remuneration systems, administrative controls and cultural controls. Furthermore, the results show the crucial role of CSR committees as leading controls for banks for giving credibility and authority of the MCSs for socio-environmental aspects, thereby supporting their integration with other traditional (financial performance) MCSs.
Building on the findings arisen in the previous parts, and focusing on board diversity as a main concern for regulators and researchers in the last years (Al-Jaifi, 2020; ESMA & EBA 2021) an empirical investigation is proposed in the third chapter. The aim is to examine the relationship between the boards’ gender diversity and the presence of CSR committee (as the leading practice for CSR performance management in the banking sector), simultaneously considering the moderating effect of background diversity. Analysing a panel data set of European banks from 2014-2021 we found the moderating role of boards’ background diversity on the relationship between boards’ gender diversity and the probability to have a CSR committee. Results indicate that concentration of financial-specific skills, and thus the low level of background diversity, negatively moderates (weakens) the relationship between gender diversity and the probability to have a CSR committee. In this sense, results seems to show that greater awareness of banks’ social responsibility, needed to raise social and environmental issues to board level, could be acquired through board background diversity, and “co-ordinated” by the presence of women. The interaction of these two forces drives toward the formalisation of a structure (i.e., CSR committee) that could support board in CSR decision-making process.
Overall this doctoral thesis provides several contributions to the literature. Particularly, by summarizing, evaluating, and synthesizing research insights previous studies with the first chapter (see Chapter 1), it provides an overarching of substantiation of the arguments in favour or against specific board characteristics in providing effects on CSR outcomes in banking sector. Furthermore, with the second chapter, it shed light on the MCSs relevant to perform socio-environmental goals in banking sector (e.g., Mio et al., 2022) that has been not investigated previously in literature .
Finally, our work also provides new insights into the complex relationship between gender diversity and CSR in banking sector, by examining impact on “new” dependent variable (CSR committee presence) and by adding a board-level factor (i.e., functional and industry-specific background diversity) that moderates this relationship (Galletta et al., 2022).
Our findings provide two important practical contributions. In light of the recent institutional attention and regulatory pressures towards environmental and social issues (EC, 2018; EP & EC, 2019, 2020; EBA, 2021), this research sheds lights on MCSs relevant for control for social and environmental performance. And thus, we provide a guide through the identification of specific MCSs best practices for banks to integrate socio-environmental factors in their business models as requested by supervisory authorities, for improving CSR performance.
Furthermore, we provide banks and policy makers with some specific characteristics that it needs to be considered for the implementation of relevant MCSs for socio-environmental goals (i.e., CSR committee). Even if, this work should be considered a preliminary contribution on the board-level’s moderating factors that could impact on the relationship between gender diversity and CSR practices (Galletta et al., 2022), the importance of considering the background diversity, along with gender diversity, could, indeed, lead to improve banks’ CSR commitment.