The impact of audit committee characteristics on ESG performance in the European Union member states: Empirical evidence before and during the COVID-19 pandemic

The purpose of this research is to investigate the impact of audit committee characteristics on environmental, social and governance (ESG) performance for European listed companies. This paper aims to understand how audit committee characteristics, namely, independence, expertise and tenure, influence ESG scores. The reported ESG scores and audit committee characteristics are collected from a sample of companies included in the Refinitiv Eikon database and analysed using a panel data analysis at both the country and industry levels. The sample is composed of 13 member states of the European Union and covers the period from 2018-2020. The results show a significant positive effect of audit committee independence and expertise on ESG performance. Moreover, audit committee tenure is found to be negatively associated with the ESG performance. These results are even statistically stronger during the pandemic period. This paper partially validates the significance of audit committee characteristics in improving ESG performance. Our analysis has implications from different perspectives, adding further information and considerations to the ongoing debate that tests the impact of the audit committee quality on ESG performance before and during the COVID-19 pandemic.