The Impact of Corporate Governance on Corporate Sustainability: A Systematic Literature Review

Abstract

The COVID-19 impact has caused rethinking about Corporate Sustainability in the world. During the last decade, the relationship between Corporate Governance (CG) and Corporate Sustainability (CS) has been discussed by various scholars in the world, but with inconclusive evidence. This study systematically reviews the literature to understand the relationship between compliance with corporate governance principles and its impact on CS in order to understand the trend, country-wise publications, journals of publications, methods applied, and the relationship in the past and to discuss the possible relationship, and finally to provide a future agenda. For this systematic review, the SCOPUS database was utilized due to having comprehensive coverage of sources in the selected area. This study reviewed related articles from the year 1998 to 2020. There were 1,205 articles at the first screening and finally 70 qualified articles were selected for final review after assessing each article based on the inclusion and exclusion criteria. The findings of this study suggest that CG and CS area is an emerging field and the published journal articles and citations during the period 1998 to 2020 have increased drastically. Further, according to the review, only 30% of studies have been published in the Asian context. Moreover, approximately 80% of the articles considered the theoretical underpinnings of this relationship using Agency theory, Legitimacy theory, and Stakeholder theory. Further, the systematic literature review indicated that only very few studies used primary data, and most of the studies used listed firms as a sample of the study. Besides, the majority (94%) of the studies used regression analysis as the data analysis method. Finally, most of the research (78%) articles found a positive relationship between CG and CS and only a few (16%) articles found a negative, mixed, and no relationship. This paper contributes the research knowledge on CG and CS literature via shedding theoretical and empirical insights. Further, as this paper highlights predominantly the positive relationship between CG and CS, and thus managers and policymakers could focus more on CG to improve CS.

Keywords: Corporate Governance, Corporate Sustainability, Systematic Review