Title: Board of directors' characteristics, internal control mechanisms and corporate sustainability performance: a theoretical framework

Authors: A.N.M. Asaduzzaman Fakir; Ruzita Jusoh; Nurliana Md. Rahin

Addresses: Department of Accounting, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia ' Department of Accounting, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia ' Department of Accounting, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia

Abstract: The purpose of this paper is to propose a framework to examine the relationship among the board of directors' characteristics, internal control mechanisms, and corporate sustainability performance. In particular, it aims to uncover how the board specific characteristics influence internal control, which, ultimately, would enhance the sustainability performance of public listed companies. The premise of the resource dependence theory is utilised to identify the board characteristics that may influence the sustainability performance; namely, size, composition, leadership, ownership, diversity, and expertise. Inspired by the institutional theory, the mediating role of internal control mechanisms, proxied by enterprise risk management (ERM) and management control systems (MCS) is also examined in this relationship. The majority of the previous studies concentrated on a few particular dimensions of sustainability like environmental and social aspects, whereas the governance and economic aspects remain unexplored in the literature. This paper fills this important research gap through holistically conceptualising sustainability performance.

Keywords: board of directors; sustainability; enterprise risk management; ERM; management control system; MCS.

DOI: 10.1504/WREMSD.2019.104869

World Review of Entrepreneurship, Management and Sustainable Development, 2019 Vol.15 No.6, pp.765 - 784

Received: 14 Feb 2018
Accepted: 28 Sep 2018
Published online: 05 Feb 2020 *

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