Board governance characteristics and ESG performance in GCC listed firms

Abstract Despite increasing attention to Environmental, Social, and Governance (ESG) performance, evidence on how board governance characteristics influence ESG outcomes in emerging markets remains limited. This study examines the impact of board governance attributes on ESG performance in publicly listed firms across the Gulf Cooperation Council (GCC) region. Using a balanced quarterly panel of 67 firms from 2017 to 2024, the analysis combines fixed- and random-effects estimations with a dynamic panel Vector Autoregressive (PVAR) framework. A composite ESG index is constructed using Principal Component Analysis and Factor Analysis. Model selection is supported by Hausman and Pesaran–Yamagata tests, while dynamic relationships are explored through local projection impulse response functions and panel causality analysis. The results show that board tenure, board independence, and board meeting frequency exert significant positive effects on ESG performance, highlighting the importance of experience, monitoring quality, and board engagement. In contrast, board size and the proportion of women in senior management are negatively associated with ESG outcomes, suggesting that formal governance mechanisms may be ineffective when substantive influence is constrained. Overall, the findings underscore the importance of context-specific governance structures for advancing ESG performance in emerging markets.