Corporate Governance and Impact on Eco‐Efficiency: A Comparative Empirical Analysis on European Union and United States Listed Companies

This study investigates the governance drivers of a firm's eco-efficiency. We measure eco-efficiency using data envelopment analysis (DEA), emphasizing efficiency measures aimed at minimizing inputs and ensuring constant returns to scale (CRS model). The governance variables considered within the study include board size, board independence, frequency of board meetings, and board gender diversity. Specifically, we examine the impact of board effectiveness, as determined by its size, level of independence, and frequency of its meetings, as well as sustainable governance, as proxied with board gender diversity. Our analysis covers two geographical contexts, Europe and the USA, to identify potential disparities between the environmentally regulated (Europe) and non-regulated (USA) environments. Employing a beta regression model, we show that board effectiveness positively affects European firms' eco-efficiency, while no impact is found on the sample of US firms. For what concerns board gender diversity, we provide evidence of a positive impact on eco-efficiency for both samples. As for practical implications, our results identify the factors, which allow to achieve environmental efficiency while maintaining economic efficiency. Our results suggest that in highly regulated contexts, specific board characteristics improve board effectiveness and drive impactful, sustainable outcomes in their environmental efforts. Instead, within less-regulated contexts, strengthening director responsibilities for environmental outcomes could lead boards to proactively engage in sustainability issues.