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The purpose of this paper is to investigate the relationship between corporate governance and cost of equity capital for a set of Spanish firms.

The paper focuses on five board characteristics that have received widespread attention in corporate governance literature (board independence, board size, existence of both audit and nomination/remuneration committees, CEO duality, and independence of board committees) in order to construct a summary corporate governance measure for each firm. Then, by using regression analysis, it examines whether higher governance quality is associated with a lower cost of equity capital.

The results show that stronger governance firms have a lower cost of equity capital with respect to firms with weaker governance, even after controlling for differences in Fama and French's risk factors (i.e. beta, size and market‐to‐book).

The dependent variable, i.e. the cost of equity capital, is an unobservable measure and, as such, it has to be estimated. Therefore, the results can be sensitive to the estimation method chosen.

There is a growing literature showing that corporate governance enhances firm valuation. However, these studies typically assume that corporate governance affects firm valuation by reducing expropriation by insiders and improving the expected cash flows that can be distributed to shareholders. Whether those mechanisms also affect the other determinant of firm value – i.e. the cost of equity capital – remains largely unknown. Moreover, there is no evidence of this issue for the case of Spain.

It is hoped that the results from the paper will provide additional information concerning corporate governance to interested parties.

The paper seeks to highlight the differences among EU countries in a series of institutional factors (e.g. enforcement, securities regulation, investor protection and ownership concentration) in order to test whether these differences are associated with the European variability in earnings management practices and, as a result, in the quality of financial information.

The approach is to use cluster analysis and regression analysis.

The results of the study confirm the main hypothesis in that earnings management practices are significantly lower in those EU countries with an institutional framework more favourable to a high quality of financial reporting (i.e. in those countries with a higher level of enforcement of the rules, stricter securities regulation, lower ownership concentration and a higher degree of investor protection).

The study presents the limitations typical from cross‐country studies. Moreover, the results should be interpreted cautiously as earnings management is difficult to measure. Future research should explore further the theoretical relations among institutional factors and earnings management practices by taking into consideration potential endogeneity issues.

The results of the study suggest that a single EU financial market should be based not only on a harmonization of financial reporting standards (such as the International Reporting Financing Standards issued by the International Accounting Standards Board) but also on a harmonization of enforcement rules, investor protection mechanisms, and securities regulation.

The main contribution is to justify from an empirical point of view the necessity of the recent EU convergence regulatory initiatives in the areas of shareholder protection, enforcement and securities regulation to facilitate the construction of the pan‐European stock market.

The concept of corporate social responsibility (CSR) covers a wide range of actions toward sustainable development. While there are growing bodies of research examining the drivers of CSR, little has been done to examine the effect of the characteristics of the managerial team on CSR. This paper aims to investigate the interplay between managerial characteristics and CSR practices to discover how such a fit affects financial performance.

A partial least squares-path modeling approach was applied to a sample of 60 French companies in the tourism sector (hotels, restaurants, leisure and leisure equipment) from 2014 to 2019. This choice was triggered by the importance of this sector in job creation, which has been strongly impacted by the pandemic crisis.

The findings suggest the positive impact of the managerial characteristics on the practices of CSR activities under certain financial constraints related to the size and indebtedness level. Then, the authors clarify that the variable characteristics component of the managerial team is mainly the educational level, the managerial experience and the ethical behavior. However, no age effect is mentioned. Third, the authors show that the managerial team characteristics and the practices of CSR activities restore the financial tourism sector performance.

This study has obviously certain limitations: first, the selected European sample can mark a big difference in the founding results because of the difference in civil rights. Second, the sample is more marked in the CSR activities. Third, this study did not take into consideration variables operationalizing ownership structure and board nature.

This study develops a model based on “managerial team” mechanisms in a sensitive area. This is a breakthrough in understanding the determinants of CSR strategies and their impact on performance while taking into account the management team’s personal characteristics.