Board Composition, Sustainability Engagement and its impact on Firm Performance: Evidence to Central Public Sector Enterprises in India

Abstract

The Central Public Sector Enterprises (CPSEs) is decisively engaged in the implementation of the initiative by the government, which concerns the comprehensive development of the society and the economy, the ecological welfare, and the assistance to the technological independence. The state-owned enterprises that are growing their business and performance but at the same time, they are facing difficulties in the field of governance and sustainability. This study is an endeavor to explore the effects of the board composition, sustainability engagement on the performance of the firm between the years 2016 and 2025. The research paper is based on Agency, Stakeholder and Resource Dependence theories and is an empirical study on the influence of independent directors, diversity of genders on the board, CSR spending and the quality of sustainability reporting on performance both the accounting based (ROA) and market based (Tobins Q). According to the findings of fixed effect and structural equation modeling of panel data regression, the better performance of the firms is due to the more independent directors and the gender diverse board. In particular, the study indicates that CSR investments are identified as the driving value in increasing ROA, whereas transparency in sustainability reporting seems to enhance performance and reputation of a firm in the market. On the other hand, the outcomes also indicate that most varied board members are more efficient in converting the ESG commitments into the tangible value. The study gives a guideline to policy makers and executives interested in updating the concept of corporate governance and sustainability within their long term strategic objectives.