Journal of Cleaner Production 414 (2023) 137553

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Experts on boards audit committee and sustainability performance: The

role of gender
Sally Mingle Yorke a, Augustine Donkor b, *, Kwadjo Appiagyei c
a
Hong Kong Polytechnic University, College of Professional and Continuing Education, Hong Kong
b
Sheridan Institute of Higher Education, School of Business, Perth, Western Australia, Australia
c
Kwame Nkrumah University of Science and Technology, School of Business, Kumasi, Ghana

A R T I C L E I N F O A B S T R A C T

Handling Editor: Jian Zuo This paper examines and compares the role of male financial experts (MFEs) and female financial experts (FFEs)
of the Audit Committee (AC), on sustainability performance using a sample of listed firms in the United States
JEL classification: from 2010 to 2021. The results show that although both MFEs and FFEs influence sustainability performance,
B54 FFEs have statistically greater influence than MFEs. The results also show that FFEs have greater influence across
J16
all three pillars of Environmental, Social and Governance (ESG) performance. Further analyses suggest that if an
M49
AC has single-gender financial expertise (only MFEs or only FFEs), this is detrimental to the firm’s sustainability
Q56
performance. The results also show that although having a gender-diverse AC is beneficial, the benefit is greater
Keywords:
if the females on the AC are financial experts. These results may partly explain the inconclusive findings of earlier
Financial experts
Gender studies on the influence of financial expertise on sustainability performance. The results remain consistent under
Audit committee a battery of robustness tests. Overall, the study highlights the need for ACs to have diverse financial experts from
Sustainability performance the perspective of non-financial reporting and adds to justifications for increasing calls for diversity on boards.
Diversity

1. Introduction 2018). However, studies on the relationship between AC members’

The audit committee (AC) is an essential component of a good
corporate governance framework (Buallay and Al-Ajmi, 2020; Dwekat
et al., 2020), with the traditional role of an AC predominantly focused
on financial reporting. However, ACs in modern corporations are
becoming increasingly concerned about the risk of misleading stake­
holders, and have thus extended their remit to the oversight of sus­
tainability information (Al-Shaer and Zaman, 2018; Dwekat et al., 2020;
Pozzoli et al., 2022). The unique individual attributes and competencies
of AC members affect the effectiveness of the committee (Al-Shaer and
Zaman, 2018). Financial experts on an AC are an important attribute
that contributes significantly to the effectiveness of the committee
(Miglani and Ahmed, 2019). Agency theory postulates that firms
appoint financial experts to their AC to improve monitoring and over­
sight (Pozzoli et al., 2022). As the remit of the AC has expanded to
encompass non-financial reporting, the presence of financial experts on
an AC suggests that the level of clarity and reliability of firm sustain­
ability will improve (Buallay and Al-Ajmi, 2020) as the committee’s
level of monitoring and oversight is also improved (Al-Shaer and Zaman,
financial expertise and non-financial disclosure have been inconclusive
(Al-Shaer and Zaman, 2018; Buallay and Al-Ajmi, 2020; Li et al., 2012;
Mohammadi et al., 2020; Pozzoli et al., 2022). Additionally, these
studies do not distinguish between the performance of an AC’s financial
experts based on their gender. Meanwhile, there are increasing calls for
more studies on the gender of financial experts on ACs (Abbasi et al.,
2020) due to certain unique skills and competencies attributable to each
gender (Gull et al., 2018).
This study responds to these calls and contributes to the published
literature by empirically providing evidence of the influence of AC
financial experts on firms’ sustainability performance based on their
gender. Specifically, our analyses distinguish between female financial
experts (FFEs) and male financial experts (MFEs) on ACs. Our analyses
also examine whether there is a significant difference in the influence of
FFEs and MFEs of ACs on firms’ sustainability performance and their
sustainability focus (ESG [i.e., individual ESG pillars]). We were moti­
vated to focus on the gender of financial experts for several reasons.
First, the concept of gender socialisation suggests significant differences
in values, attitudes, and behaviours of males and females because of

* Corresponding author.
E-mail addresses: sm.yorke@cpce-polyu.edu.hk (S.M. Yorke), adonkor@sheridan.edu.au (A. Donkor), kappiagyei@knust.edu.gh (K. Appiagyei).

https://doi.org/10.1016/j.jclepro.2023.137553
Received 28 December 2022; Received in revised form 17 May 2023; Accepted 22 May 2023
Available online 2 June 2023
0959-6526/© 2023 Elsevier Ltd. All rights reserved.
S.M. Yorke et al.
their socialisation (Hoominfar, 2019; Ridgeway and Correll, 2004).
Females on boards are hence considered to present different knowledge,
skills, perspectives, and abilities (Miller & del Carmen Triana, 2009;
Nielsen and Huse, 2010). The unique attributes of females make them
significant contributors to effective decision-making (Lopatta et al.,
2020; Zalata et al., 2018). On the issue of sustainability, it has been
suggested that female personality traits make females more concerned
about sustainability than males (Nadeem et al., 2017; Oradi and
E-Vahdati, 2021). Moreover, according to resource dependence theory,
“gender-diverse boards are highly advantageous not only for ethical
reasons but also for maintaining a good relationship with the external
environment to acquire resources” (Nadeem et al., 2017; Oradi and
E-Vahdati, 2021, p. 278). Therefore, diversity on an AC can lead to
increased transparency and disclosure of sustainability information
(Pitenoei et al., 2022). However, research considering the gender of
financial experts on ACs has focused on issues related to earnings
management (Zalata et al., 2018), audit quality (Abbasi et al., 2020),
and internal control weakness (ICW) (Oradi and E-Vahdati, 2021).
Despite the growing literature on the gender of financial experts on ACs,
there is limited evidence of its influence on corporate sustainability
practices.
Given that there are established differences between males and fe­
males, we expected the influence of MFEs and FFEs on sustainability
performance and practices to differ. We empirically tested our predic­
tion by relying on a sample of listed firms in the United States from 2010
to 2021. Our findings suggest that although both MFEs and FFEs on an
AC have an influence on a firm’s sustainability performance, significant
differences exist, with females exerting a greater influence. We also
found significant differences in the focus of MFEs and FFEs on an AC in
terms of the three ESG pillars – Environmental, Social, and Governance.
We found that MFEs did not influence the social pillar, while FFEs
exerted greater influence on all three pillars compared with their male
counterparts. Overall, the results suggest that FFEs have more influence
on sustainability compared with MFEs. This influence extends beyond
the mere inclusion of females (i.e. adding females without financial
expertise) on the AC. We conducted several additional tests to assess the
robustness of our results.
Our study contributes to the published literature in two ways. First, it
extends the literature on the influence of financial expert gender in
corporate reporting (Abbasi et al., 2020; Oradi and E-Vahdati, 2021;
Zalata et al., 2018) by focusing on the influence of financial expert
gender on non-financial reporting. Second, by ascertaining that FFEs
have more influence on sustainability performance compared with
MFEs, our results suggest that the positive relationship between finan­
cial experts and sustainability as established by previous research may
be driven by FFEs. Consequently, our results highlight that differences in
gender consideration across different studies may have contributed to
the inconclusive findings in the published literature.
Practically, our findings should be of interest to firms seeking to
significantly improve their sustainability performance. Such firms
should consider increasing the number or proportion of FFEs on their
ACs. In addition, regulators, and advocates for diversity on boards and
committees, are informed of the role that FFEs on an AC can play to
advance sustainability performance.
2. Literature review and hypothesis development
2.1. Audit committee and financial expertise
The committees of a firm’s board offer support to the board in per­
forming its dual roles of monitoring and advising the management (Kim,
2022; Ramos et al., 2022). Thus, the board can exercise its duties effi­
ciently by delegating responsibilities to its committees (Koh et al.,
2007). The principal committee of a board, which has increasingly
grown in importance, is the AC (Al-Shaer and Zaman, 2018). The AC’s
prominence is observed by its inclusion in regulations such as the
2
Journal of Cleaner Production 414 (2023) 137553
Cadbury Report,1 the Smith Report,2 and the Sarbanes Oxley Act,3
which were aimed at reducing the reoccurrence of corporate failures
(Alhababsah and Yekini, 2021). Thus, the AC is considered an essential
aspect of every good corporate governance framework (Buallay and
Al-Ajmi, 2020; Cohen et al., 2004; Dwekat et al., 2020). Moreover, the
AC remains a conduit for the exercise of the board’s oversight of man­
agement policies and practices (Chahine and Filatotchev, 2011;
Mohammadi et al., 2020). In recent times, the remit of the AC now ex­
tends beyond financial reporting to encompass monitoring and oversight
of non-financial reporting because the AC seeks to address any risk of
firms misleading stakeholders (Al-Shaer and Zaman, 2018; Pozzoli et al.,
2022; Trotman and Trotman, 2015). Although the corporate governance
and sustainability performance nexus has been extensively studied,
research on the influence of AC on sustainability performance remains
scant (Dwekat et al., 2020; Pozzoli et al., 2022). Previous studies have
affirmed that ACs enhance firms’ non-financial disclosures (i.e., sus­
tainability reporting) (Al-Shaer and Zaman, 2018; Dwekat et al., 2020;
Pozzoli et al., 2022). The effectiveness of the committee is affected by
the unique individual attributes and competencies of AC members
(Al-Shaer and Zaman, 2018). Thus, there is increasing research interest
in the role of AC characteristics on corporate social responsibility (CSR)
and sustainability performance (see Al-Shaer and Zaman, 2018; Dwekat
et al., 2020; Pozzoli et al., 2022; Trotman and Trotman, 2015). A key
characteristic of the AC that influences its effectiveness is the presence of
financial experts (Miglani and Ahmed, 2019). Financial experts enhance
the monitoring role expected of the committee. Knowledge of financial
and accounting matters means that financial experts can understand the
complexities of the financial reporting process (Dhaliwal et al., 2010)
and reduce reliance on the judgement of auditors (Buallay and Al-Ajmi,
2020). This increases their ability to detect problems and improve
financial reporting (Bédard and Gendron, 2010; Pucheta-Martínez et al.,
2021). Additionally, financial experts on the AC contribute significantly
to the establishment of robust internal controls and risk management
strategies (Oradi and E-Vahdati, 2021; Shaukat et al., 2016).
However, little is known about the influence of financial experts on
the AC and sustainability performance, and the few available studies on
the influence of financial experts on AC and sustainability performance
have been inconclusive (Al-Shaer and Zaman, 2018; Miglani and
Ahmed, 2019; Pozzoli et al., 2022). For instance, Pozzoli et al. (2022)
found sustainability performance to be positively and significantly
associated with financial expertise on the AC. Similarly, Al-Shaer and
Zaman (2018) found that the credibility of firm sustainability reporting
was improved by financial expertise on the AC. Contrary to the above
empirical findings, financial expertise on the AC has been found to be
negatively associated with sustainability reporting (Buallay and
Al-Ajmi, 2020), and intellectual capital disclosures (Li et al., 2012).
This study sought to add to this stream of literature by identifying an
attribute of AC financial expert (i.e., gender) which could provide a
plausible explanation for the inconclusive findings.
2.2. Gender diversity on the board and board committees
Board gender diversity is another important dimension of effective
corporate governance that continues to attract the attention of regula­
tors, practitioners, and academics (Adams, 2016; Gabaldon et al., 2016;
Nadeem, 2020). According to the concept of gender socialisation, males
and females possess significant differences in values, attitudes, and be­
haviours due to their socialisation (Hoominfar, 2019; Ridgeway and
1
Cadbury (1992). Cadbury report: The financial aspects of corporate
governance. HMG, London.
2
Smith (2003). Audit Committees: Combined Code Guidance. London:
Financial Reporting Council.
3
Sarbanes-Oxley Act (2002). In The Public Company Accounting Reform and
Investor Protection Act. Washington DC: US Congress.
S.M. Yorke et al.
Correll, 2004). The different attributes of females are considered
essential for quality decision-making on the board (Lopatta et al., 2020;
Zalata et al., 2018). As a result, stakeholders are increasingly demanding
that firms increase female involvement on their boards (Nadeem, 2020).
The published literature suggests that certain attributes of females make
them better supervisors and monitors because they are more risk-averse,
more conservative, and therefore more responsible (Oradi and E-Vah­
dati, 2021). Diversity on the board leads to an increase in the quality of
information available to the board because of the different knowledge,
skills, perspectives, and abilities of the individual members (Miller & del
Carmen Triana, 2009; Nielsen and Huse, 2010). A heterogeneous board
is therefore considered to perform better in periods of uncertainty
(Nielsen and Huse, 2010). The contribution of a board’s diversity to its
performance and efficiency is also reflected in the composition of its
committees and sub-committees. Thus, females on committees of the
board can enhance the effectiveness of those committees (Miglani and
Ahmed, 2019).
Regarding AC, published literature affirms that gender-diverse ACs
are more effective (Aldamen et al., 2018; Miglani and Ahmed, 2019) and
improve the transparency of non-financial information (Appuhami and
Tashakor, 2017; Pitenoei et al., 2022). Previous studies on the gender of
financial experts on ACs suggest that female financial experts have in­
fluence on earnings management (Zalata et al., 2018), audit quality
(Abbasi et al., 2020), and internal control weakness (ICW) (Oradi and
E-Vahdati, 2021). Despite the growing literature on the gender of
financial experts on ACs, there is limited evidence of its influence on
corporate sustainability practices. Meanwhile, studies considering the
influence of financial experts on AC and sustainability performance do
not specifically consider the role of gender although there are increasing
calls for more studies on the gender of financial experts on ACs (Abbasi
et al., 2020). We sought to fill this gap by distinguishing between female
financial experts (FFEs) and male financial experts (MFEs) influence on
sustainability performance. While financial experts on the AC improve
the effectiveness of the committee’s monitoring and oversight of man­
agement policies and practices including sustainability performance
(Al-Shaer and Zaman, 2018; Pozzoli et al., 2022), the gender of the
financial experts may also influence the ability of the AC to improve
sustainability practices, especially when female traits are considered
more valuable in addressing sustainability issues (Kim and Starks,
2016).
2.3. Hypothesis development
According to the agency theory, the separation of ownership and
control leads to agency problems as shareholders and managers pursue
different interests (An et al., 2011). Shareholders mitigate agency
problems and promote interest congruence by using effective gover­
nance mechanisms to monitor the behaviour of managers (Angela Liu
et al., 2015; Cerbioni and Parbonetti, 2007). Thus, an effective board
through the audit committee provides appropriate monitoring and
oversight of management policies and practices (Mohammadi et al.,
2020). Agency theory postulates that the presence of financial experts on
the AC influences the effectiveness of the committee (Miglani and
Ahmed, 2019) by improving the monitoring and oversight of manage­
ment policies and practice (Al-Shaer and Zaman, 2018; Pozzoli et al.,
2022).
Traditionally, the AC has been concerned with monitoring activities
related to mandatory financial reporting and disclosure (Dwekat et al.,
2020). This has, however, evolved to include oversight of non-financial
disclosures (Al-Shaer and Zaman, 2018; Trotman and Trotman, 2015),
especially following numerous corporate failures (Kolk and Pinkse,
2010), which has increased stakeholder interest in non-financial infor­
mation (Bernardi, 2020; Velte and Stawinoga, 2017). The narrative
nature of sustainability disclosures and their potential benefits to firms
make them a potential tool for stakeholder impression management
(Beske et al., 2020; Ioannou and Serafeim, 2017). Thus, the credibility of
3
Journal of Cleaner Production 414 (2023) 137553
firm sustainability information has become a concern (Al-Shaer and
Zaman, 2018). Consequently, the monitoring and oversight roles of the
AC now extend to sustainability information of the firm (Al-Shaer and
Zaman, 2018; Dwekat et al., 2020; Pozzoli et al., 2022; Trotman and
Trotman, 2015). This is because the AC is concerned about any risk of
misleading stakeholders, hence the need to protect the credibility of
both financial and non-financial reports (Al-Shaer and Zaman, 2018). As
the level of monitoring and oversight of the AC is improved in the
presence of financial experts (Al-Shaer and Zaman, 2018), it is expected
that their presence will equally improve the clarity and reliability of firm
sustainability reporting (Buallay and Al-Ajmi, 2020). Besides perform­
ing monitoring and oversight role, the board performs advisory roles,
and the expertise of the financial experts on the board is crucial for
business strategies and corporate policy appraisal, allocation of corpo­
rate resources and management of business risk (Custódio and Metzger,
2014). Thus, the presence of financial experts on the board is expected to
improve both financial and non-financial outcomes including sustain­
ability performance (Kim and Starks, 2016).
According to the resource dependence theory, firms survive in their
operating environment by acquiring and controlling essential resources
(Terjesen et al., 2009). The control of these essential resources can be
achieved by developing internal resources that facilitate access to
essential external resources (Pfeffer and Salancik, 1978). The board has
been identified as a source of valuable internal resources that facilitates
the acquisition of external resources to achieve strategic objectives (Lu
and Herremans, 2019). The characteristics of board members such as
expertise, knowledge, skills, and values are important attributes that
help firms to exert influence and gain control of external resources for
strategic purposes (Lu and Herremans, 2019; Pfeffer and Salancik,
1978). According to the concept of gender socialisation, there are sig­
nificant differences in values, attitudes, and behaviours of males and
females due to differences in their socialisation (Hoominfar, 2019;
Ridgeway and Correll, 2004). For instance, females possess values, at­
titudes and traits that make them more risk averse (Oradi and E-Vahdati,
2021) and demonstrate more care for life in society (Liao et al., 2015).
Thus, it is expected that gender diversity on boards will bring different
knowledge, skills, perspectives, and abilities which can enrich the
quality of board decision-making and board performance (Miller & del
Carmen Triana, 2009; Nielsen and Huse, 2010) as well as the effec­
tiveness of the board’s committees, including the AC (Miglani and
Ahmed, 2019).
The difference in personality traits between male and female di­
rectors may be useful for addressing sustainability issues in firms’
environment that are essential for business survival (Kim and Starks,
2016). Female directors are more risk-averse, more conservative, and
therefore more responsible (Oradi and E-Vahdati, 2021), making them
better supervisors and monitors. Prior studies have established that the
personality traits of female directors make them more concerned than
males regarding issues of sustainability (e.g., Cabral and Sasidharan,
2021; Donkor et al., 2021a; Kahreh et al., 2013; Liao et al., 2015;
Nadeem et al., 2017; Oradi and E-Vahdati, 2021). While male directors
focus on financial performance, female directors are more interested in
environmental and social responsibility (Ibrahim and Angelidis, 1994;
Liao et al., 2015). Therefore, resource dependence theory suggests that
gender diversity on the board and its committees is a valuable internal
resource that facilitates the achievement of the firm’s strategic
objectives.
Following the agency theory, we argue that the inclusion of financial
experts on the AC is essential in improving sustainability performance.
In addition, we follow the resource dependence theory to argue that the
difference in values, attitudes, and behaviours of males and females can
be considered an important source of resources for firm growth and
survival if gender diversity on the board and its committees are pursued
(Donkor et al., 2021a; Kim and Starks, 2016; Nadeem, 2020). Given that
males and females have different personality traits and females on the
board and sub-committees ensure the discussion of issues that may not
S.M. Yorke et al.
be of interest to males (Gul et al., 2011), as well as females possessing
traits that are more valuable for addressing sustainability issues, we
expect the influence of males and females on sustainability issues to
differ.
Empirical studies have found a significant positive association be­
tween gender diversity on an AC and sustainability performance (e.g.,
Appuhami and Tashakor, 2017; Pitenoei et al., 2022). However, these
studies did not focus on the financial expertise of females on the AC. On
the other hand, studies that have considered the gender of financial
experts have focused on the quality of financial reporting (Oradi and
E-Vahdati, 2021). In the present study, we extended these streams of
literature by exploring the role of gender in the association between AC
financial experts and sustainability performance. Thus, following
agency theory and resource dependence theory, we formulated the
following hypotheses to test the role of gender on the influence of AC
financial experts on firm sustainability performance:
H1. Male and female financial experts on the audit committee influ­
ence firm sustainability performance.
H2. There is significant difference in the contribution of AC male and
female financial experts to firm sustainability performance.
Decisions about corporate sustainability reporting are influenced by
personal values (Hemingway and Maclagan, 2004) because of the
voluntary nature of sustainability practices (Nadeem et al., 2017).
Disclosure of sustainability issues by firms encompasses environmental,
social, and governance information. Given the established difference
between males and females, we expected that the focus of male and
female directors on the different dimensions of sustainability may not be
the same. This is especially because of the differences in values and
personality traits between males and females that influence their choices
and decision-making (Donkor et al., 2021a; Nadeem et al., 2017; Oradi
and E-Vahdati, 2021). It has been argued that the presence of females on
boards and ACs is likely to improve governance given the ability of fe­
males to enhance oversight and monitoring (Oradi and E-Vahdati,
2021). In addition, the different roles played by females in society and
their care for life (Hofstede and Minkov, 2010; Liao et al., 2015) make
them more inclined to consider environmental and social issues than
males (Ibrahim and Angelidis, 1994). Research has found that gender
diversity on the board and AC of a firm promotes its environmental and
social responsibility disclosures (Appuhami and Tashakor, 2017; Fría­
s-Aceituno et al., 2013; Pitenoei et al., 2022).
We thus contend that gender difference in financial experts is likely
to influence their focus on the different dimensions of sustainability
(ESG) performance. We thus formulated the following hypothesis:
H3. There are significant differences in the sustainability performance
focus of male and female financial experts on the audit committee.
3. Research design
3.1. Data and sample
To test the hypotheses for the study, data of listed firms in the United
States from 2010 to 2021 was gleaned from multiple sources including
Compustat, BoardEx, and Refinitiv. The final data set, across all in­
dustries, consisted of 2892 firms for 17,111 firm-year observations (see
Table 1).4 Sustainability performance data for sampled firms were ob­
tained from their ESG scores using Refinitiv; data on gender expertise on
ACs were gathered from BoardEx, and data on the financial performance
of firms and other characteristics were obtained from Compustat.
4
Table 3 details the characteristics of firms for the study’s sample.
4
Journal of Cleaner Production 414 (2023) 137553
3.2. Model specification
To address the objectives of the study, the following ordinary least
squares regression models were adopted in line with Pozzoli et al.
(2022). Model 1 assessed the effect of female and male AC experts on
sustainability performance (i.e., Hypotheses 1), while Model 2 assessed
the differences in the focus of both female and male AC experts on the
individual sustainability (ESG) pillars (i.e., Hypotheses 3). To test Hy­
pothesis 2, the differences in the coefficients in Model 1 for FFEs and
MFEs on the AC were tested.
ESG scoreit = b0 + b1 ACFFEit + b2 ACMFEit + b3 ACNEDit + b4 AC tenureit
+ b5 Boardsizeit + b6 ESGCOMit + b7 Firmageit + B8 Big4it + b9 Cashholdit
+ b10 SGROWit + b11 Firmsizeit + B12 BMTit + b13 DEBTit + b14 ROEit
+ B15 RnDit + b16 Inventoryit + B17 Litigationit + B18 Disaccrualit
∑ ∑ ∑
+ indutsryD + yeardD + FirmD + εit
(1)
ESG pillarsit = b0 + b1 ACFFEit + b2 ACMFEit + b3 ACNEDit
+ b4 AC tenureit + b5 Boardsizeit + b6 ESGCOMit + b7 Firmageit + B8 Big4it
+ b9 Cashholdit + b10 SGROWit + b11 Firmsizeit + B12 BMTit + b13 DEBTit
+ b14 ROEit + B15 RnDit + b16 Inventoryit + B17 Litigationit + B18 Disaccrualit
∑ ∑ ∑
+ indutsryD + yeardD + FirmD + εit
(2)
3.3. Variable measurement
3.3.1. Dependent variable
The dependent variable of the study, firm sustainability perfor­
mance, was measured in line with the published literature using Refi­
nitiv ESG scores as a proxy (e.g., Paolone et al., 2021; Pozzoli et al.,
2022; Yarram and Adapa, 2021). According to Refinitiv,5 the ESG score
is a percentile score that emanates from over 630 ESG company-level
measures captured and calculated by Refinitiv. The scores reflect
firms’ relative ESG performance, commitment, and effectiveness to ESG
indicators (Paolone et al., 2021). Over 630 ESG company-level measures
were grouped under 10 categories to reformulate the three pillar scores
and the final ESG score. The higher the score, the higher the perfor­
mance of the firm regarding sustainability. The individual ESG pillars
were also used to substantiate the findings and test the focus of MFEs
and FFEs on the AC. Thus, the environment pillar [ENVIRON], social
pillar [SOCIAL], and the governance pillar [GOVERN] were all
measured as a percentile score.
3.3.2. Independent variables
In line with the objectives of the study, the independent variables of
interest were the FFEs and MFEs on an AC. Following the published
literature (e.g., Abbasi et al., 2020; Oradi and E-Vahdati, 2021; Zalata
et al., 2018), the study measured FFEs and MFEs on an AC as the number
of FFEs on an AC (ACFFE_sum) and the number of MFEs on an AC
(ACMFE_sum). For robustness, we adopted a second measure of FFEs
and MFEs on an AC as the proportion of FFEs on an AC (ACFFE_ratio)
and MFEs on an AC (ACMFE_ratio).
3.3.3. Control variables
To avoid the potential effects of omitted variable bias, confounding
control variables were included in the study’s model (Bloomfield et al.,
2016; Whited et al., 2022). As evidenced in the literature (e.g.,
5
Refinitiv, May 2022. Environmental, Social and Governance scores from
Refinitiv. https://www.refinitiv.com/en/sustainable-finance/esg-scores#meth
odology.
S.M. Yorke et al.
Bloomfield et al., 2016; Whited et al., 2022) controlling for variables
established to influence a study’s outcome variable helps to improve the
internal validity of the study and assuages biases concerns arising from
confounding and other omitted extraneous variables.
To address factors that may confound estimates of the relationship
between female and male AC experts and sustainability performance,
the study followed the published literature to control for several board
and firm characteristics associated with sustainability performance.
From the agency theory perspective, corporate governance mechanisms
such as the board, audit committee and ESG committee are essential for
transparency in the reporting of financial and non-financial information
(Endrikat et al., 2020; Kathy Rao et al., 2012) because such mechanisms
reduce agency conflict (Dey, 2008). Thus, corporate governance char­
acteristics such as board size (Boardsize), AC independence (ACNED),
AC tenure (AC_tenure), and the presence or not of an ESG committee
(ESGCOM) have been found to influence sustainability performance
(Al-Shaer and Zaman, 2016; Nadeem et al., 2017; Yarram and Adapa,
2021), and are therefore controlled in our model. Similarly, we
controlled for firm characteristics that have been identified as associated
with sustainability performance such as firm size (Firmsize), firm per­
formance (ROE), auditor quality (Big4), growth opportunity (SGROW),
firm age (Firmage), financial capacity (Cashhold), leverage (DEBT),
research and development (RnD), inventories (Inventory),
market-to-book value (BMT), high litigation risk (Litigation), and
discretionary accruals (Disaccrual) (Artiach et al., 2010; Byron and Post,
2016; Carter et al., 2010; El-Bassiouny and El-Bassiouny, 2019; Hackett
et al., 2020) (see Table 2). This is based on the assertion that these
characteristics are essential in determining the visibility of firms. The
political cost hypothesis suggests that firms with these characteristics
are likely to possess the resources that enable them to engage in sus­
tainability activities (Artiach et al., 2010; Omran et al., 2021; Zaid et al.,
2020) and are more motivated to improve their sustainability actions as
part of an overall strategy to reduce potential political costs (Branco and
Rodrigues, 2008; Watts and Zimmerman, 1978).
4. Empirical results and analysis
4.1. Descriptive statistics and correlation analysis
Table 3 presents the descriptive statistics of the sample. On sus­
tainability performance, the average ESG score was 39 percent, while
only 27 percent of the sample scored above 50 percent (ESG_Highscore).
The average scores for Environment, Social, and Governance were 24
percent, 42 percent, and 48 percent respectively. These scores were
within the range of Lu and Herremans (2019), and Pozzoli et al. (2022).
For AC characteristics, we found that on average an AC was made up
of 4.34 members, with 99 percent of our sample exclusively composed of
independent directors (ACNED). The average tenure (AC_tenure) was
4.49 years, with the longest serving number of years being 17.08. On AC
diversity, the average number of females on an AC (ACFEM_sum) was
approximately 0.9, which meant that females accounted for an average
proportion of 20 percent of an AC. This was within the range of Miglani
and Ahmed (2019) and Zalata et al. (2018). On AC expertise, ACs on
average had approximately 2.4 experts, which meant that experts
accounted for 56 percent of AC members. Assessing the variation in
gender of AC experts showed that the mean number of MFEs (ACM­
FE_sum) was approximately 1.91, representing 45 percent of all AC
members (ACMFE_ratio); while the average number of FFEs (ACFFE_­
sum) was approximately 0.48, representing 11 percent of all AC mem­
bers (ACFFE_ratio). Overall, the AC gender diversity statistics were
5
Journal of Cleaner Production 414 (2023) 137553
consistent with previous studies, which suggested a lower representa­
tion of females and FFEs on boards (Miglani and Ahmed, 2019; Zalata
et al., 2018). The small representation of females on boards is not sur­
prising as there are no mandatory female quotas on boards in the US.
On other firm characteristics, on average, 8 percent of our total
sample had an ESG committee; the general board size was approxi­
mately 8.37 members (with a maximum cap of 16); sample firms were
approximately 31.69 years old (Firmage), with a sales growth (SGROW)
of 12 percent; 82 percent were audited by the ‘Big Four’ audit firms,
while 9 percent had litigation expenses. The mean firm size was 8.02
(actual = USD16.433 billion). On average, cash holdings represented 19
percent of total assets, DEBT represented 41 percent of total assets, RnD
represented 4 percent of total assets, and inventory represented 7
percent of total assets. The average book-to-market value (BMT) was 46
percent, with a return on equity (ROE) of approximately 2 percent.
Table 4 presents the correlation matrix of the variables of interest.
Both FFEs on the AC (i.e., both ACFFE_sum and ACFFE_ratio), and MFEs
on the AC (i.e., both ACMFE_sum and ACMFE_ratio) were positively
associated with a firm’s sustainability performance. Higher levels of
FFEs on the AC were associated with lower levels of MFEs on the AC, and
vice-versa. The low levels of correlations among the independent vari­
ables gave no concern for multicollinearity (Kılıç and Kuzey, 2018).
4.2. Multivariate regression analysis
Table 5 presents results related to the influence of ACFFEs (measured
as ACFFE_sum and ACFFE_ratio) on sustainability performance. Column
1 of Table 5 shows a positive and statistically significant coefficient of
ACFFE_sum (β = 0.031 and t-stat = 9.278). This suggests that on average
when FFEs on the AC increased by one, the mean sustainability perfor­
mance increased by 3.1 percent. Given the mean ESG_score of 39
percent, this should translate to an average increase of 1.21 percent in
ESG score. The results remained statistically similar for ACFFE_ratio (β
= 0.139 and t-stat = 9.540 – Column 2). These results confirmed Hy­
pothesis 1 by showing that ACs with FFEs had an influence on sustain­
ability performance.
Table 5 also presents results related to the influence of ACMFEs
(ACMFE_sum; ACMFE_ratio) on sustainability performance. The results
showed a positive influence of ACMFE on sustainability performance
comparable to that of ACFFEs. Specifically, the coefficient on ACMFE_­
sum (β = 0.006 and t-stat = 2.836) suggested that on average, when
MFEs on the AC increased by one, the mean sustainability performance
increased by 0.6 percent. Given the mean ESG_score of 39 percent, this
should translate to an average increase of 0.23 percent in ESG score. The
result in Column 2, where MFEs on the AC is measured as ACMFE_ratio
(coefficient = 0.029 and t-statistic = 3.421), affirmed the finding. These
results supported Hypothesis 1 (i.e., MFEs). Overall, the results for H1
suggested that both FFEs and MFEs influenced sustainability
performance.
These findings generally supported the essence of financial experts
on the AC, but from the perspective of non-financial reporting. In this
view, the study aligned with previous studies that projected the need for
more financial experts on the AC (Abbasi et al., 2020; Oradi and
E-Vahdati, 2021; Pozzoli et al., 2022; Zalata et al., 2018). The findings
also corroborate the agency theory which suggests that the inclusion of
financial experts on the AC improves the committee’s effectiveness
(Al-Shaer and Zaman, 2018; Miglani and Ahmed, 2019; Pozzoli et al.,
2022). While previous studies have examined board gender diversity,
financial performance (e.g., Gull et al., 2018; Joecks et al., 2013; Miglani
and Ahmed, 2019), and non-financial performance (e.g., Donkor et al.,
S.M. Yorke et al.
2021a; Lu and Herremans, 2019; Yarram and Adapa, 2021), this study
contributes to the published literature by not only focusing on gender
diversity on a board committee, but also by examining gender diversity
among AC financial experts and the influence of such diversity on sus­
tainability performance. This is distinct from other recent literature,
which has focused on AC gender diversity on financial and audit issues
(Abbasi et al., 2020; e.g., Oradi and E-Vahdati, 2021; Zalata et al.,
2018).
Interestingly, although both ACFFEs and ACMFEs had a positive
influence on sustainability performance, it can be observed that the
coefficients and t-statistics for both measures of ACFFEs were larger than
those of ACMFEs (Table 5, Columns 1 and 2). Economically, while an
increase in ACFFE increased the average ESG_score by 1.21 percent, the
increase in average ESG_score attributable to an increase in an ACMFE
was only 0.23 percent. These results signalled that FFEs had more in­
fluence on sustainability performance than MFEs. To fully establish the
difference between the influence of FFEs and MFEs on sustainability
performance, we statistically tested whether the coefficients for FFEs
and MFEs were statistically equal. The results (Prob > F = 0.0000) of
tests of pairs of coefficients (reported in Panel B of Table 5) rejected the
null hypothesis that there is no difference between the influence of
ACFFEs and ACMFEs on sustainability performance, and showed instead
that the difference was statistically significant (i.e., for both sum and
ratio measures). This supported our prediction in H2 that ACFFEs have
more significant influence on sustainability performance than their male
counterparts. This finding aligned with Zalata et al. (2018), who found
that FFEs on the AC significantly reduced firms’ earnings management
practices, but MFEs on the AC did not. Our results further supported
those of Oradi and E-Vahdati (2021), who found that FFEs on the AC
were associated with less ICW, whereas MFEs on the AC were not
significantly associated with ICW. By focusing on non-financial report­
ing, which seems to be missing in the published literature, this study
provides evidence that FFEs on the AC have more influence on a firm’s
sustainability performance than MFEs on the AC. The results affirm the
opinions of Zalata et al. (2018) and Abbasi et al. (2020) that the con­
tradictory literature on the effects of AC financial expertise (e.g., Bédard
and Gendron, 2010; Buallay and Al-Ajmi, 2020; Widyasari and Ayunda,
2020) could be addressed by considering the gender diversity of experts.
By showing that FFEs on the AC are likely to pay more attention to
sustainability issues and their advancement than their male counter­
parts, our result confirms the resource dependence theory, that females
are a source of valuable skills and experience for the advancement of a
firm’s sustainability performance.
Hypothesis 3 examined whether there is a difference in the sustain­
ability performance focus (i.e., Environment, Social, and Governance
pillars – Model 2) of MFEs and FFEs on an AC. The results are reported in
Table 6. The coefficients of ACFFE_sum and ACFFE_ratio were positive
and significant across all three pillars of ESG. The MFEs variables
(ACMFE_sum and ACMFE_ratio) were positive for the environmental
and governance pillars. However, we found no significant relationship
for the social pillar. These results suggest that males may not be as
concerned as females about social issues. This confirms assertions that
females are more concerned with societal issues and care for life than
males (Hofstede and Minkov, 2010; Ibrahim and Angelidis, 1994; Liao
et al., 2015). According to Liao et al. (2015) and Ibrahim and Angelidis
(1994), female directors are more inclined to social responsibility than
their male counterparts. The results further aligned with previous
studies postulating that gender diversity on boards and ACs promotes
social and environmental disclosures (Appuhami and Tashakor, 2017;
Frías-Aceituno et al., 2013; Pitenoei et al., 2022).
6
Journal of Cleaner Production 414 (2023) 137553
Furthermore, although the MFEs had positive coefficients on the
Environment and Governance pillars, these coefficients were smaller
than the coefficients of FFEs. To further affirm Hypothesis 3, we thus
further tested whether the differences between the coefficients were
statistically significant. The results (Prob > F = 0.0000) of tests of pairs
of coefficients across all columns in Table 6 (reported in Panel B)
rejected the null hypothesis that there is no difference between female
and male financial experts, and showed instead that the differences were
statistically significant. Thus, although FFEs influence environment and
governance issues more than social issues, the influence of FFEs across
all three ESG pillars is more than that of their male counterparts. This
affirmed that females, especially FFEs on ACs, were more responsive to
issues of sustainability than their male counterparts (Appuhami and
Tashakor, 2017; Pitenoei et al., 2022). These findings give credence to
the resource dependence theory (Kim and Starks, 2016).
4.2.1. Alternative explanation
To rule out concerns that our hypothesised relationships were being
driven by the gender diversity of an AC and not necessarily by the
gender of the experts, we performed two additional tests.
First, we reran model 1 replacing expert variables with gender di­
versity variables. We measured gender diversity as the number
(ACFEM_sum) and ratio (ACFEM_ratio) of females on the AC. The results
are reported in Table 7. From Panel A of Table 7, Column 1, the coef­
ficient of gender diversity on the AC (ACFEM_sum, β = 0.025) was
smaller than the coefficient of FFEs on the AC (ACFFE_sum) reported in
Table 5 (β = 0.031). This suggests that FFEs have a greater impact on
sustainability than the mere presence of females on the AC. We statis­
tically tested the difference in coefficients in the two regressions and the
difference (unreported) was statistically significant. From Panel B of
Table 7, Column 1, the results remained statistically similar when we
focused on the ratio measures. A consistent explanation was further
established when the pillars of ESG were considered (Table 7, Panels A
and B, Columns 2–4).
Second, we examined a subsample of firms with at least one female
on their AC. In this sample, we compared ESG scores and ESG pillars of
firms with at least one female expert - ACFFE_dummy (i.e., female ex­
perts = 1), and those with no female experts (i.e., no female_experts =
0). The results are reported in Table 7, Panel C. The results show that
firms with FFEs had higher sustainability performance compared with
firms with no FFEs. Specifically, the results suggest that ACs with at least
one FFE are positively and significantly associated with firms’ sustain­
ability performance (i.e., ESG_Score, ENVIRON, SOCIAL, GOVERN).
This implies that the presence of FFEs on a firm’s AC is key for its sus­
tainability performance, and that the study’s outcome was not driven by
the mere presence of females on the AC.
4.2.2. Further analyses
Overall, the results indicate that ACFFEs have a greater influence on
sustainability performance and the respective ESG pillars than ACMFEs.
Building on these, we further analysed whether ACs whose experts were
exclusively female experienced higher sustainability performance
compared with ACs with exclusively MFEs. The results as reported in
Table 8 show that a female-only expert did not have a significant in­
fluence on sustainability performance. However, having only MFEs
generated a negative association with sustainability performance. The
results remained consistent when we analysed for ESG pillars. Taken
together, the results of these tests suggest that having experts of the
same gender on the AC is not beneficial to firms’ sustainability perfor­
mance. Hence, firms will perform better on sustainability if they have a
S.M. Yorke et al.
good mix of male and female experts on their AC. This affirms previous
studies, which have asserted that a completely male board (i.e., uniform
group) is detrimental while a ‘tilted group’ or a ‘balanced group’ is
beneficial (Joecks et al., 2013; Kanter, 1977). Thus, from the point of
view of the composition of experts on the AC, a completely male group
of experts is detrimental to sustainability while a completely female
group of experts does not affect sustainability performance. A group
tilted towards FFEs advances firms’ sustainability more than a group
tilted towards MFEs.
4.2.3. Robustness
We performed several robustness tests to support our main analyses
and to assuage endogeneity concerns. Thus, we re-examined our hy­
potheses using a second measure of sustainability performance
(ESG_Highscore), change analysis, lead-lagged analysis, and instru­
mental variable model (ie., Heckman 2SLS).
ESG Highscore represents ESG performance measured as a dummy
variable with a value of 1 if ESG_score is greater than 0.50 and
0 otherwise. The results reported in Table 9, Panels A and B are
consistent with the main results of the study (Tables 5 and 6).
Change Analysis – To address potential issues of omitted variable
bias and reverse causality, the study followed the published literature by
re-examining the study’s model using change level regression analysis
(Donkor et al., 2021b, 2022; Obeng et al., 2020). Change was defined as
t1 – t. Panel C of Table 9 presents the abridged results. The results
showed that a change in FFEs on the AC leads to a greater percentage
change in firms’ sustainability performance. Similarly, the change in
FFEs significantly influenced the three pillars of ESG. However, the
change in MFEs on AC were insignificant to sustainability performance.
Lead-lagged Analysis – Hinged on the assumption that ‘Y1 cannot
explain Xt-1’ (Bellemare et al., 2017), we followed the published litera­
ture (e.g., Donkor et al., 2021b; Li, 2016) to re-examine our models with
lagged FFEs and MFEs. Panel D of Table 9 presents the results of the
lead-lag analysis. The results were both quantitatively and qualitatively
similar to those reported in Tables 5 and 6
Heckman 2SLS – In line with the published literature, we further
employed an instrumental variable approach – the Heckman two-stage
selection model – to address issues of endogeneity (Donkor et al.,
2021b; Lopatta et al., 2020; Nadeem, 2020). The challenge with the
instrumental variable approach is identifying a variable (i.e., the in­
strument) that correlates with selecting FFEs on the AC but is unrelated
to sustainability performance. Following Oradi and E-Vahdati (2021),
we adopted the percentage of FFEs on the AC per industry year group as
the instrumental variable. The inverse Mills ratio (IMR) was included in
the second stage. Panel E of Table 9 presents the results. For all models,
the results indicated a positive significant association of ACFFEs with
sustainability performance and the three pillars of ESG. However, for
ACMFEs, a positive and significant association was established with
sustainability performance, and with the environmental and governance
pillars, but not with the social pillar, as already reported in other
models.
The alignment of the results suggests that the main results from the
OLS estimation model are robust.
5. Conclusion
The AC of a board has increased in importance as a corporate
governance mechanism for corporations. The role of the AC has evolved
to encompass oversight of sustainability activities and information in
addition to its traditional role of safeguarding the credibility of the
financial reporting process. Previous studies have suggested that the
presence of financial experts on a firm’s AC is essential to its effective­
ness because such expertise improves understanding of financial
reporting, external audits, and risks. However, studies on the effects of
AC financial expertise have focused on internal controls, internal audi­
tors, external auditors, financial performance, and reporting quality.
7
Journal of Cleaner Production 414 (2023) 137553
Little attention has been given to non-financial reporting even though
investors have an increased interest in firm sustainability performance.
There have also been calls for studies to examine the gender diversity
effects of financial experts on a firm’s AC because the established dif­
ference in socialisation between males and females suggests that females
have unique attributes that make them useful in strengthening the
effectiveness of the AC. This study thus explored the role of the gender of
AC financial experts on firm sustainability performance.
We found both the number and ratio of FFEs on a firm’s AC to be
significantly positively related to firm sustainability performance.
Similarly, the presence of MFEs on the AC was also significantly and
positively related to firm sustainability performance. This suggests that
the presence of financial experts on the AC, irrespective of their gender,
does influence the sustainability behaviour of firms. Thus, the expertise
of financial experts on the AC may not be useful only for safeguarding
the quality of financial reporting, but also for promoting non-financial
objectives such as sustainability performance. However, the magni­
tude of the influence of AC financial experts on firm sustainability per­
formance differed significantly between males and females. We found
that changes in FFE composition on a firm’s AC had a greater influence
on firms’ sustainability performance than MFE. Therefore, to achieve
greater changes in sustainability performance, the gender of financial
experts on the AC matters. Hence, we support the assertion that the
socialisation of females, their roles in society, beliefs, and values make
them predisposed to pay more attention to sustainability issues than
their male counterparts. Regarding the three pillars of ESG, we found
that the focus and emphasis of ACMFEs and ACFFEs on each pillar
differed significantly. Firstly, while FFEs had a significant influence on
all three pillars of ESG, MFEs did not influence the social pillar. This
suggests that on social issues the attention of FFEs is remarkably
different from that of MFEs on the AC. By their nature, males are
generally more concerned about economic performance than social
performance. However, on the environmental and governance pillars of
ESG, MFEs on the AC did exert some influence. Nevertheless, the in­
fluence of FFEs on the environmental and governance pillars was
significantly greater than MFEs. Our results were found to be robust as
we employed a variety of analyses (see ‘Robustness’) to affirm the
consistency of our findings.
This study contributes to the existing literature in two ways. First, we
have affirmed the positive association between AC financial experts and
firm sustainability performance, an area of research which remains
contested. Second, we expanded the AC financial experts’ literature by
introducing gender effects on the association between AC financial ex­
perts and firm sustainability performance. We have established that
FFEs on the AC have a greater influence on firm sustainability perfor­
mance than MFEs. This gives credence to the concept of gender social­
isation and resource dependence theory.
Our findings are of interest to investors and firms seeking improve­
ments in sustainability performance. Such firms should consider
increasing the number of financial experts on their AC as such expertise
has implications not only for financial reporting and risk but also for
sustainability performance. Furthermore, the gender of financial experts
on the AC should preferably be female if greater changes in sustain­
ability performance are expected. Regulators and advocates for diversity
on boards may find our study useful as it informs them of the role played
by FFEs on the AC in advancing sustainability performance. We however
note that female representation on the board and AC of US firms is low.
However, based on our findings on the value of female financial experts
on the AC relative to sustainability performance, policymakers should
encourage firms to improve gender diversity on their boards and com­
mittees. Perhaps, consideration may be given to mandatory quotas for
female representation on boards by regulators. Although we included
several control variables, industry and year fixed effects, performed two-
way firm and year clustering, and several additional tests to assess the
robustness of our results, we acknowledge that our models have inherent
limitations. These make them incomparable to natural experiments in
S.M. Yorke et al. Journal of Cleaner Production 414 (2023) 137553

assessing causal effects. Hence, our results may not imply causal effect of
FFEs or MFEs on firm sustainability performance and should therefore
be interpreted cautiously. Future studies may reassess our hypothesised
relationships by establishing causation. Furthermore, although the size
of the capital market in the United States is big and offers sufficient
available data, focusing on a single country limits the generalisability of
our findings to other contexts. Future research may therefore consider
several capital markets to advance the literature.
project. Kwadjo Appiagyei: Conceptualization, Contributed to the
conceptualization of the ideas for the manuscript., Reviewed literature.,
Drafted the final paper – for the coherence of ideas and meriting intel­
lectual context for discussions., Contributed to the final approval of the
version for submission., Jointly accountable for all aspects of the project.
Declaration of competing interest

CRediT authorship contribution statement The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
Sally Mingle Yorke: Conceptualization, Data curation, Contributed the work reported in this paper.
to the conceptualization of the ideas for the manuscript, Conceived and
designed the analysis., Collected a portion of the data and prepared the Data availability
data., Supported in methodology writing., Contributed to the final
approval of the version for submission., Jointly accountable for all as­ Data will be made available on request.
pects of the project. Augustine Donkor: Conceptualization, Data
curation, Methodology, Contributed to the conceptualization of the Acknowledgement
ideas for the manuscript., Supported in the writing of the literature re­
view., Supported in data collection and the preparation of the data., We thank the College of Professional and Continuing Education, The
Wrote the methodology and analysis., Contributed to the final approval Hong Kong Polytechnic University, Hong Kong for partly sponsoring the
of the version for submission., Jointly accountable for all aspects of the proofreading of this manuscript.

Appendix

Table 1
Sample Selection

Firms Firm Years

Initial Compustat data for 2010–2021 19,447 136,045

Firms missing Combined BoardEx data (profile, employment, and committee data) 10,786 59,475
Firms missing Refinitiv ESG data 5715 58,474
Firms missing variable observations for main analyses 54 985
Number of firms and firm-year observations for final analysis 2892 17,111

Table 2
Variable Definitions

Variable Definition

ESG_score ESG score by refinitiv divided by 100

ESG_pillars Individual ESG pillar score by refinitiv divided by 100 (i.e., Environment [Environ], Social and Governance [Govern] pillars)
ACFFE_sum Number of female experts on the AC
ACFFE_ratio Proportion of female experts on the AC
ACMFE_sum Number of male experts on the AC
ACMFE_ratio Proportion of male experts on the AC
ACFEM_sum Number of females on the AC
ACFEM_ratio Proportion of females on the AC
ACNED Dummy with value of one if AC is made up of only independent directors and zero if otherwise
AC_tenure Average tenure of AC members; combined tenure of all AC members divided by number of AC members
Boardsize Natural log of the number (sum) of board directors
ESGCOM Dummy with value of one if firm has an ESG committee and zero if otherwise
Firmage Natural log of the number of years of record of a firm as available in Compustat.
Big4 Dummy with value of one is target’s auditor is Ernst & Young” “Deloitte & Touche” KPMG” Pricewaterhouse, zero otherwise
Cashhold Ratio of a firm’s cash and short-term investment to total assets.
SGROW The ratio of a firm’s sales in the current year minus the sales in previous year to sales in the previous year.
Firmsize Natural log of firm’s total assets.
BMT Common equity divided by market value (stock price * number of common shares outstanding)
DEBT Sum of current liabilities and long-term debt divided by total assets
ROE Income before extraordinary items - adjusted for common stock equivalent divided by average of opening and closing common equity
RnD Research and Development Expense divided by total asset
Inventory Total inventories divided by total assets
Litigation Dummy with value of one if a firm has litigation expense and zero if otherwise
Disaccrual Represents discretionary accruals measured using Kothari et al. (2005) performance

8
S.M. Yorke et al. Journal of Cleaner Production 414 (2023) 137553

Table 3
Summary statistics

Variables N mean p50 Std. min p25 p75 max

ESG_score 17111 0.39 0.19 0.08 0.25 0.36 0.52 0.86

ESG_Highscore 17111 0.27 0.45 0.00 0.00 0.00 1.00 1.00
Environ 17110 0.24 0.27 0.00 0.00 0.14 0.44 0.90
Social 17110 0.42 0.21 0.06 0.26 0.38 0.56 0.92
Govern 17111 0.48 0.22 0.04 0.30 0.48 0.66 0.92
ACFFE_sum 17111 0.48 0.00 0.67 0.00 0.00 1.00 3.00
ACMFE_sum 17111 1.91 2.00 1.20 0.00 1.00 3.00 5.00
ACFFE_ratio 17111 0.11 0.00 0.15 0.00 0.00 0.25 0.60
ACMFE_ratio 17111 0.45 0.40 0.26 0.00 0.25 0.67 1.00
ACFEM_sum 17111 0.91 1.00 0.85 0.00 0.00 1.00 3.00
ACFEM_ratio 17111 0.20 0.20 0.18 0.00 0.00 0.33 0.67
ACNED 17111 0.99 1.00 0.08 0.00 1.00 1.00 1.00
AC_tenure 17111 4.49 3.56 4.04 0.00 1.14 6.86 17.08
*Boardsize 17111 8.37 2.80 3.00 6.00 8.00 10.00 16.00
ESGCOM 17111 0.08 0.00 0.27 0.00 0.00 0.00 1.00
*Firmage 17111 31.69 20.00 2.00 15.00 27.00 43.00 72.00
Big4 17111 0.82 1.00 0.38 0.00 1.00 1.00 1.00
Cashhold 17111 0.19 0.09 0.23 0.00 0.03 0.24 0.96
SGROW 17111 0.12 0.06 0.36 − 0.63 − 0.01 0.17 2.44
Firmsize 17111 8.02 8.04 1.90 3.43 6.80 9.23 12.72
BMT 17111 0.46 0.38 0.42 − 0.54 0.19 0.66 2.23
DEBT 17111 0.41 0.42 0.26 0.00 0.22 0.57 1.25
ROE 17111 0.02 0.10 0.69 − 3.91 0.00 0.18 2.92
RnD 17111 0.04 0.00 0.10 0.00 0.00 0.03 0.61
Inventory 17111 0.07 0.02 0.11 0.00 0.00 0.11 0.55
Litigation 17111 0.09 0.00 0.28 0.00 0.00 0.00 1.00
Disaccrual 17111 3.66 3.66 0.09 3.36 3.61 3.70 3.97
Note: Table 3 presents descriptive statistics for variables used in our analyses. * variables are not transformed in the table above for ease of interpretation but are log-
transformed when used as independent.

9
 S.M. Yorke et al.
Table 4
Correlation Analysis Table

Variables 1 2 3 4 5 6 7 8 9 10 11 12

1. ESG_score 1
2. Environ 0.856*** 1
3. Social 0.873*** 0.727*** 1
4. Govern 0.721*** 0.450*** 0.398*** 1
5. ACFFE_sum 0.303*** 0.250*** 0.247*** 0.254*** 1
6. ACMFE_sum 0.220*** 0.218*** 0.151*** 0.208*** 0.0438*** 1
7. ACFFE_ratio 0.253*** 0.201*** 0.210*** 0.212*** 0.947*** − 0.0570*** 1
8. ACMFE_ratio 0.0949*** 0.0964*** 0.0560*** 0.108*** − 0.102*** 0.863*** − 0.123*** 1
9. ACNED 0.0372*** 0.0263*** 0.0234** 0.0437*** 0.00799 − 0.000585 0.0151* 0.0164* 1
10. AC_tenure 0.0969*** 0.136*** 0.0283*** 0.129*** − 0.0797*** 0.142*** − 0.0962*** 0.106*** 0.0174* 1
11. Boardsize 0.491*** 0.444*** 0.398*** 0.367*** 0.237*** 0.282*** 0.146*** 0.0481*** 0.0013 0.178*** 1
12. ESGCOM 0.261*** 0.259*** 0.230*** 0.182*** 0.0916*** 0.0878*** 0.0637*** 0.0274*** − 0.00843 0.0214** 0.209*** 1
13. Firmage 0.418*** 0.430*** 0.280*** 0.375*** 0.130*** 0.248*** 0.0642*** 0.117*** 0.0233** 0.433*** 0.407*** 0.172***
14. Big4 0.305*** 0.309*** 0.322*** 0.161*** 0.164*** 0.132*** 0.155*** 0.0911*** 0.0169* 0.140*** 0.258*** 0.0908***
15. Cashhold − 0.207*** − 0.242*** − 0.0770*** − 0.237*** − 0.109*** − 0.198*** − 0.0632*** − 0.111*** − 0.0292*** − 0.192*** − 0.284*** − 0.103***
16. SGROW − 0.109*** − 0.121*** − 0.0527*** − 0.110*** − 0.0449*** − 0.0917*** − 0.0237** − 0.0495*** 0.014 − 0.0965*** − 0.115*** − 0.0394***
17. Firmsize 0.576*** 0.598*** 0.496*** 0.359*** 0.214*** 0.243*** 0.157*** 0.107*** 0.0501*** 0.228*** 0.583*** 0.214***
18. BMT − 0.0690*** − 0.0508*** − 0.124*** 0.0381*** − 0.0261*** 0.0477*** − 0.0381*** 0.0261*** 0.0157* 0.0377*** 0.0366*** − 0.00137
19. DEBT 0.130*** 0.152*** 0.131*** 0.0652*** 0.0949*** 0.0550*** 0.0916*** 0.0525*** − 0.0127 − 0.0338*** 0.0189* 0.0703***
20. ROE 0.142*** 0.143*** 0.0906*** 0.122*** 0.0497*** 0.0713*** 0.0359*** 0.0417*** 0.0254*** 0.0955*** 0.121*** 0.0362***
21. RnD − 0.166*** − 0.199*** − 0.0408*** − 0.200*** − 0.100*** − 0.159*** − 0.0646*** − 0.0821*** − 0.0153* − 0.168*** − 0.221*** − 0.0890***
10

22. Inventory 0.0368*** 0.0725*** − 0.011 0.0678*** − 0.00977 0.0657*** − 0.0223** 0.0409*** 0.00225 0.0926*** − 0.0192* − 0.00809
23. Litigation 0.0397*** 0.0442*** 0.0235** 0.0446*** 0.00728 0.0352*** 0.00181 0.0248** 0.00528 0.0222** 0.0338*** 0.0201**
24. Disaccrual − 0.0600*** − 0.0978*** − 0.0279*** − 0.0539*** − 0.0433*** − 0.0391*** − 0.0352*** − 0.0264*** 0.0118 − 0.0387*** − 0.0547*** − 0.0548***

Variables 13 14 15 16 17 18 19 20 21 22 23 24

13. Firmage 1
14. Big4 0.172*** 1
15. Cashhold − 0.392*** − 0.0602*** 1
16. SGROW − 0.190*** − 0.0502*** 0.171*** 1
17. Firmsize 0.460*** 0.376*** − 0.492*** − 0.116*** 1
18. BMT 0.0309*** − 0.112*** − 0.258*** − 0.113*** 0.161*** 1
19. DEBT 0.0452*** 0.213*** − 0.147*** − 0.0176* 0.0258*** − 0.372*** 1
20. ROE 0.189*** 0.0618*** − 0.259*** − 0.0316*** 0.222*** − 0.00158 − 0.0178* 1 1
21. RnD − 0.315*** − 0.0480*** 0.691*** 0.136*** − 0.455*** − 0.228*** − 0.0131 − 0.309*** − 0.131*** 1

Journal of Cleaner Production 414 (2023) 137553

22. Inventory 0.154*** 0.0460*** − 0.146*** − 0.0362*** − 0.0517*** − 0.0108 0.122*** 0.0693*** − 0.0669*** 0.0284*** 1
23. Litigation 0.0513*** 0.0244** − 0.0777*** − 0.0295*** 0.0496*** 0.0280*** 0.0464*** 0.0152* 0.141*** 0.0718*** − 0.0327*** 1
24. Disaccrual − 0.0928*** − 0.0762*** 0.117*** 0.0500*** − 0.0894*** − 0.000964 − 0.168*** − 0.0283***

Table 4 reports the pairwise correlations between variables used in the analyses. ***, **, * represents statistical significance of 0.01, 0.05, and 0.10 significance levels.
S.M. Yorke et al. Journal of Cleaner Production 414 (2023) 137553

TABLE 5
Relation between AC Experts’ Gender and ESG Performance

ESG_Score

β t β t

ACFFE_sum 0.031*** 9.278

ACFFE_ratio 0.139*** 9.540
ACMFE_sum 0.006** 2.836
ACMFE_ratio 0.029*** 3.421
ACNED 0.041** 3.020 0.038** 2.868
AC_teure − 0.000 − 0.220 − 0.000 − 0.265
Boardsize 0.081*** 10.258 0.090*** 11.541
ESGCOM 0.049*** 4.856 0.049*** 4.959
Firmage 0.049*** 10.683 0.050*** 11.053
Big4 − 0.002 − 0.248 − 0.003 − 0.380
Cashhold 0.043** 2.266 0.043** 2.256
SGROW − 0.016*** − 3.253 − 0.016*** − 3.290
Firmsize 0.054*** 21.639 0.053*** 21.692
BMT − 0.026*** − 4.666 − 0.026*** − 4.619
DEBT − 0.003 − 0.269 − 0.002 − 0.215
ROE 0.005** 2.936 0.005** 2.801
RnD 0.140*** 5.847 0.137*** 5.723
Inventory 0.025 0.710 0.029 0.822
Litigation 0.004 0.902 0.004 0.916
Disaccrual 0.013 0.820 0.013 0.861
Year effect Yes Yes
Industry effect Yes Yes
Firm Cluster Yes Yes
Industry Cluster Yes Yes
Constant − 0.482*** − 7.028 − 0.504*** − 7.471
2
R 0.538 0.539
Adjusted R2 0.536 0.536
Observations 17111 17111
Panel B: Difference between ACFFE and ACMFE (ACFFE > ACMFE)
ACFFE > ACMFE 0.025 0.110
Prob > F = 0.0000 Prob > F = 0.0000
Table 5 reports the regression results for testing the relationship between AC Experts’ Gender and ESG performance. The
dependent variable is ESG (ESG_Score). The independent variables of interest are female experts (ACFFE_sum; ACFFE_ratio)
and male experts (ACMFE_sum; ACMFE_ratio). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels,
respectively. All models include industry and year-fixed effects with firm and year clustering. Continuous variables are win­
sorized at 1% and 99% levels.

Table 6
Relation between AC Experts’ Gender and respective ESG Pillars

ENVIRON SOCIAL GOVERN

1 2 3

β t β t β t β t β t β t

ACFFE_sum 0.031*** 6.291 0.020*** 5.532 0.044*** 9.432

ACFFE_ratio 0.132*** 5.989 0.088*** 5.438 0.203*** 9.850
ACMFE_sum 0.007** 2.452 0.002 0.670 0.011*** 4.433
ACMFE_ratio 0.026* 2.066 0.007 0.760 0.059*** 5.417
ACNED 0.004 0.224 0.001 0.043 0.016 0.882 0.015 0.803 0.089*** 7.349 0.083*** 6.886
AC_tenure − 0.001 − 1.334 − 0.001 − 1.356 − 0.002* − 2.122 − 0.002* − 2.153 0.004*** 3.885 0.004*** 3.938
Boardsize 0.063*** 5.724 0.073*** 6.724 0.068*** 7.245 0.072*** 7.888 0.096*** 8.778 0.110*** 10.375
ESGCOM 0.063*** 4.311 0.064*** 4.355 0.055*** 4.144 0.055*** 4.199 0.042*** 3.558 0.042*** 3.669
Firmage 0.049*** 7.458 0.051*** 7.747 0.030*** 5.414 0.031*** 5.590 0.068*** 11.380 0.070*** 11.780
Big4 − 0.026* − 2.154 − 0.027* − 2.190 0.013 1.794 0.012 1.746 0.002 0.237 0.001 0.056
Cashhold 0.057* 1.872 0.057* 1.840 0.069*** 3.359 0.069*** 3.345 0.009 0.430 0.010 0.444
SGROW − 0.030*** − 5.332 − 0.031*** − 5.419 − 0.007 − 1.128 − 0.008 − 1.155 − 0.015*** − 3.952 − 0.015*** − 3.982
Firmsize 0.087*** 20.072 0.087*** 20.223 0.064*** 27.644 0.064*** 27.588 0.019*** 6.155 0.019*** 6.062
BMT − 0.033*** − 4.049 − 0.033*** − 3.983 − 0.037*** − 5.697 − 0.037*** − 5.686 0.007 0.872 0.007 0.928
DEBT 0.001 0.052 0.002 0.104 − 0.009 − 0.765 − 0.009 − 0.740 0.004 0.296 0.005 0.358
ROE 0.004* 1.809 0.004 1.729 0.002 1.100 0.002 1.070 0.008** 3.104 0.008** 2.958
RnD 0.166*** 4.858 0.162*** 4.732 0.262*** 7.903 0.261*** 7.847 − 0.033 − 0.994 − 0.038 − 1.173
Inventory 0.080 1.371 0.085 1.451 − 0.009 − 0.235 − 0.007 − 0.191 0.070 1.617 0.077 1.771
Litigation 0.001 0.124 0.001 0.138 0.002 0.497 0.002 0.503 0.010 1.433 0.010 1.456
Disaccrual 0.001 0.025 0.001 0.025 0.010 0.583 0.010 0.590 0.001 0.033 0.002 0.077
Year effect Yes Yes Yes Yes Yes Yes
Industry effect Yes Yes Yes Yes Yes Yes
Firm Cluster Yes Yes Yes Yes Yes Yes
Industry Cluster Yes Ye Yes Yes Yes Yes
Constant − 0.760*** − 6.221 − 0.781*** − 6.437 − 0.407*** − 4.916 − 0.417*** − 5.058 − 0.260*** − 3.142 − 0.297*** − 3.630
(continued on next page)

11
S.M. Yorke et al. Journal of Cleaner Production 414 (2023) 137553

Table 6 (continued )
ENVIRON SOCIAL GOVERN

1 2 3

β t β t β t β t β t β t
2
R 0.542 0.541 0.475 0.472 0.290 0.291
Adjusted R2 0.539 0.538 0.472 0.475 0.286 0.287
Observations 17110 17110 17110 17110 17111 17111
Panel B: Difference between ACFFE and ACMFE (ACFFE>ACMFE) for all ESG pillars
ACFFE>ACMFE 0.024 0.106 0.019 0.081 0.033 0.144
Prob > F = 0.0014 Prob > F = 0.0008 Prob > F = 0.0007 Prob > F = 0.0005 Prob > F = 0.0001 Prob > F = 0.0000
Table 6 reports the regression results for testing the relationship between AC Experts’ Gender and respective ESG Pillars. The dependent variables are respective scores
for ESG pillars (ENVIRON, SOCIAL, GOVERN). The independent variables of interest are female experts (ACFFE_sum; ACFFE_ratio) and male experts (ACMFE_sum;
ACMFE_ratio). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All models include industry and year-fixed effects with firm and
year clustering. Continuous variables are winsorized at 1% and 99% levels.

Table 7
Alternative Explanation

ESG_Score ENVIRON SOCIAL GOVERN

1 2 3 4

Panel A: AC Gender diversity - measured as the number of females on AC

β t β t β t β t
ACFEM_sum 0.025*** 8.066 0.026*** 6.234 0.019*** 5.339 0.031*** 8.876
Control Variables Yes Yes Yes Yes
R2 0.537 0.541 0.476 0.284
Adjusted R2 0.535 0.539 0.473 0.280
Observations 17111 17110 17110 17111
Panel B: AC Gender diversity - measured as the ratio of females on AC
β t β t β t β t
ACFEM_ratio 0.110*** 7.817 0.103*** 5.381 0.079*** 5.047 0.144*** 9.161
Control Variables Yes Yes Yes Yes
R2 0.537 0.540 0.476 0.285
Adjusted R2 0.535 0.538 0.473 0.281
Observations 17111 17110 17110 17111
Panel C: Subsample Analyses of Firms with at least a female on AC
β t β t β t β t
ACFFE_dummy 0.016*** 4.059 0.015** 2.590 0.008 1.765 0.026*** 3.717
Control Variables Yes Yes Yes Yes
R2 0.540 0.563 0.482 0.268
Adjusted R2 0.536 0.559 0.477 0.261
Observations 10879 10878 10878 10879
The table presents the regression output of alternative explanations with AC gender diversity measured as the number of females (ACFEM _sum) and the ratio of
females (ACFEM_ratio) on AC (Panel A and B) and sub-sample of firms with at least a female expert (ACFFE_dummy = 1) on AC (Panel C) on ESG performance and the
pillars of ESG (ESG_Score, ENVIRON, SOCIAL, GOVERN). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All models include
original control variables, industry and year-fixed effects with firm and year clustering. Continuous variables are winsorized at 1% and 99% levels.

Table 8
Further Analysis

ESG_Score ENVIRON SOCIAL GOVERN

1 2 3 4

Panel A: Female-only experts on AC

β t β t β t β t
ACFFE_only 0.013 1.391 0.017 1.367 0.010 1.060 0.011 0.865
Control Variables Yes Yes Yes Yes
R2 0.528 0.536 0.472 0.273
2
Adjusted R 0.525 0.534 0.469 0.269
Observations 17111 17110 17110 17111
Panel B: Male-only experts on AC
β t β t β t β t
ACMFE_only − 0.036*** − 8.317 − 0.037*** − 5.815 − 0.023*** − 4.731 − 0.051*** − 7.528
Control Variables Yes Yes Yes Yes
R2 0.535 0.540 0.474 0.284
Adjusted R2 0.533 0.538 0.471 0.280
Observations 17111 17110 17110 17111
Table 8 presents the regression output of female-only experts (ACFFE_only) on AC (Panel A) and male-only experts (ACMFE_only) on AC (Panel B) on ESG perfor­
mance and the pillars of ESG (ESG_Score, ENVIRON, SOCIAL, GOVERN). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All
models include original control variables, industry and year-fixed effects with firm and year clustering. Continuous variables are winsorized at 1% and 99% levels.

12
S.M. Yorke et al. Journal of Cleaner Production 414 (2023) 137553

Table 9
Robustness

ESG_Highscore ENVIRON_Highscore SOCIAL_Highscore GOVERN_Highscore

1 2 3 4

Panel A: ESG performance measured as a dummy (ESG_Highscore)

β t β t β t β t
ACFFE_sum 0.250*** 8.004 0.151*** 3.512 0.155*** 5.093 0.256*** 8.524
ACMFE_sum 0.049** 2.447 0.056** 2.536 0.024 1.177 0.064*** 4.627
Control Variables Yes Yes Yes Yes
Psuedo R2 0.4233 0.4361 0.3348 0.1622
Observations 17008 16987 17006 17100
Panel B: ESG performance measured as a dummy (ESG_Highscore)
β t β t β t β t
ACFFE_ratio 1.209*** 7.837 0.798*** 4.348 0.728*** 5.033 1.125*** 9.466
ACMFE_sum 0.260*** 2.830 0.275*** 2.589 0.127 1.474 0.318*** 4.577
Control Variables Yes Yes Yes Yes
Psuedo R2 0.4244 0.4368 0.3352 0.1622
Observations 17008 16987 17006 17100
ΔESG_Score ΔENV ΔSOCIAL ΔGOVERN
Panel C: Change Analysis
β t β t β t β t
ΔACFFE_sum 0.009*** 4.436 0.005* 2.121 0.005* 2.080 0.016*** 3.622
ΔACMFE_sum 0.000 0.314 0.001 0.997 0.001 0.776 − 0.001 − 0.984
ΔControl Variables Yes Yes Yes Yes
R2 0.030 0.053 0.029 0.013
Adjusted R2 0.023 0.047 0.022 0.007
Observations 13855 13854 13854 13855
ESG_Score ENV SOCIAL GOVERN
Panel D: Lead-Lag Analysis
β t β t β t β t
lagACFFE_sum 0.034*** 9.622 0.035*** 6.285 0.024*** 5.790 0.046*** 9.735
lagACMFE_sum 0.007*** (3.294) 0.009** 3.003 0.002 0.838 0.012*** 4.738
Control Variables Yes Yes Yes Yes
2
R 0.529 0.544 0.474 0.270
Adjusted R2 0.526 0.541 0.470 0.265
Observations 14244 14244 14244 14244
ESG_Score ENV SOCIAL GOVERN
Panel E: Heckmann Two-Stage Model
β t β t β t β t
ACFFE_sum 0.031*** 9.222 0.031*** 6.269 0.020*** 5.504 0.044*** 9.383
ACMFE_sum 0.007*** 3.180 0.008** 2.587 0.003 1.413 0.012*** 4.531
IMR − 0.013 − 1.506 − 0.010 − 0.942 − 0.020* − 2.129 − 0.011 − 1.120
Control Variables Yes Yes Yes Yes
R2 0.539 0.542 0.475 0.290
Adjusted R2 0.536 0.539 0.472 0.290
Observations 17111 17110 17110 0.286
The table presents the robustness outputs: Panel A and B – Alternative measure of ESG performance and ESG Pillars ESG_Highscore, ENVIRON_Highscore,
SOCIAL_Highscore, GOVERN_Highscore), Panel C – Change analysis (change is t1 – t), Panel D – lead-lag analysis and Panel E − Instrumental variable model
(Heckman two-stage selection model). ***, **, and * denote statistical significance at 0.01, 0.05, and 0.10 levels, respectively. All models include original control
variables, industry and year-fixed effects with firm and year clustering. Continuous variables are winsorized at 1% and 99% lev.

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