Explanation of variables
| Variable | Description measure | Reference | Expected effect on ESG performance |
|---|---|---|---|
| Dependent variable | |||
| ESG variable (source: Refinitiv) | |||
| ESG performance (ESG_perf) | Comprehensive scoring of the environment, social and governance performance by the weighted average of the ESG scores and ESG controversies (captured from global media sources) (see Table 1) | ||
| Independent variables | |||
| Board diversity indicators | |||
| Board size (B_size)* | Total number of directors on the bank's board | Said et al. (2009), Amran et al. (2014), Jensen (1993), De Andres et al. (2005), Laksmana (2008) | Positive |
| Board gender diversity (B_gend) | Percentage of women on the board of directors (number of female directors divided by total number of board members) | Adams and Ferreira (2009), Amran et al. (2014), Cordeiro et al. (2020), Husted and de Sousa-Filho (2019), Cucari et al. (2018), Galbreath (2016, 2018); Rao and Tilt (2016a, b), Barako and Brown (2008) | Non-linear |
| Board mass of gender diversity (B_mgend) | Dummy variable that takes value 1 if the bank's board has at least three women, 0 otherwise | Post et al. (2011), Fernansez-Feijoo et al. (2014), Liu (2018), Ben-Amar et al. (2017), Shoham et al. (2017) | Positive |
| Board age (B_age) | Board average age (the time-varying age in years of directors in board) | Giannarakis (2014), Cucari et al. (2018) | No effects |
| Board activity (B_act)* | Natural logarithm of the total number of board meetings during the year | Disli et al. (2022) | Positive |
| Board independence (B_ind) | Percentage of independent directors on the bank's board | Ahmed et al. (2006), Chau and Gray (2010), Lim et al. (2007), Rao and Tilt (2016a, b) | Positive/Negative |
| CSR/sustainability committee (CSR_com) | Dummy variable equal to 1 if the bank has a CSR committee, 0 otherwise | Hussain et al. (2018), Liao et al. (2015) | Positive |
| Control variables | |||
| Bank size (SIZE)* | Natural logarithm of Total assets of the bank (Euro) | Setó-Pamies (2015), Helfaya and Moussa (2017) | Positive |
| Leverage (LEV) | The ratio of Tier 1 capital to Total Assets (proxy for the Basel 3 Leverage ratio) | Helfaya and Moussa (2017) | Positive |
| Return on equity (ROE) | Net income divided by the value of total shareholders' equity | Setó-Pamies (2015), Helfaya and Moussa (2017) | Positive/Negative |
| GDP per capita (GDP)* | Gross Domestic Product (GDP) per capita | Fernansez-Feijoo et al. (2014), Hu and Scholtens (2014) | Positive/Negative |
| Variable | Description measure | Reference | Expected effect on ESG performance |
|---|---|---|---|
| Dependent variable | |||
| ESG performance (ESG_perf) | Comprehensive scoring of the environment, social and governance performance by the weighted average of the ESG scores and ESG controversies (captured from global media sources) (see | ||
| Independent variables | |||
| Board size (B_size)* | Total number of directors on the bank's board | Positive | |
| Board gender diversity (B_gend) | Percentage of women on the board of directors (number of female directors divided by total number of board members) | Non-linear | |
| Board mass of gender diversity (B_mgend) | Dummy variable that takes value 1 if the bank's board has at least three women, 0 otherwise | Positive | |
| Board age (B_age) | Board average age (the time-varying age in years of directors in board) | No effects | |
| Board activity (B_act)* | Natural logarithm of the total number of board meetings during the year | Positive | |
| Board independence (B_ind) | Percentage of independent directors on the bank's board | Positive/Negative | |
| CSR/sustainability committee (CSR_com) | Dummy variable equal to 1 if the bank has a CSR committee, 0 otherwise | Positive | |
| Control variables | |||
| Bank size (SIZE)* | Natural logarithm of Total assets of the bank (Euro) | Positive | |
| Leverage (LEV) | The ratio of Tier 1 capital to Total Assets (proxy for the Basel 3 Leverage ratio) | Positive | |
| Return on equity (ROE) | Net income divided by the value of total shareholders' equity | Positive/Negative | |
| GDP per capita (GDP)* | Gross Domestic Product (GDP) per capita | Positive/Negative | |
Note(s): *Natural logarithmic transformations of the numerical (non index) variables
Source(s): Table by authors
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