Do foreign directors reinforce better waste management? The moderating role of eco‐innovation

Abstract Prior studies have reported an association between corporate waste management practices and certain board attributes, but none have focused on foreign directors. Therefore, we examine foreign directors' contributions to firms' waste management by exclusively focusing on waste reduction and recycling. Furthermore, we explore an important channel through which foreign directors spur better waste management, namely, eco‐innovation. Drawing on 6891 observations affiliated with 9 sectors and 46 countries, we execute country, industry and year fixed‐effects regression analysis. We find that while foreign directors on the board are negatively associated with waste generation, they are positively associated with waste recycling. Furthermore, while the eco‐innovativeness of firms negatively moderates the association between foreign directors on the board and waste generation, it positively moderates the association between foreign directors on the board and waste recycling. Further channel analyses reveal more insights concerning polluting versus non‐polluting and poor versus strong regulatory environments.