Corporate Boards and Environmental Offence Conviction: Evidence from the United Kingdom.

Abstract

Purpose This paper reports the results of an investigation into the relationship between corporate boards and the likelihood of a firm being convicted of an environmental offence in the United Kingdom (UK). Design/Methodology/Approach The study uses a probit model to analyse the relationship between corporate boards and the likelihood of a firm being convicted of an environmental offence in the UK, controlling for firm size, financial leverage and profitability. Findings The results suggest that the likelihood of a firm being convicted of an environmental offence increases with board size, but decreases with the presence of a woman on the board. No support is found for our hypotheses about the proportion of outside directors and the presence of a lawyer on the board. Marginal effects results also show that adding one member to the board increases the chance of a firm being convicted for an environmental offence by 4.2% while having a woman on the board decreases the likelihood of a firm being convicted of an environmental offence by 31.8%. Research limitations/implications The sample size of 55 firms is small which could affect the generalisability of the study. Originality/Value The study uses proprietary data obtained from the UK Environmental Agency to provide evidence for the first time how corporate boards affect the chances of a listed firm being convicted of an environmental offence in the UK.