ESG reputational risks and board monitoring committees

We examine the value relevance of board monitoring committees when there are increased corporate reputation risks (CRR) from undesirable media coverage of environmental, social, and governance (ESG) issues. Empirical evidence indicates that monitoring committees can play an effective role in mitigating investors’ negative stock market reactions in this situation. The results are robust across different model specifications, and we utilize control groups to validate our findings further. Overall, this study lends support to the beneficial effects of board monitoring committees, particularly those with an emphasis on environmental and social aspects.