The Impact of Board Diversity on Corporate Performance: New Evidence from Southeast Europe

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services. ABSTRACTMany organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board diversity and firm's financial performance. We use a sample of 35 companies from five countries in Southeast Europe (Macedonia, Croatia, Serbia, Bosnia and Herzegovina, and Greece) for the period between 2008 and 2012 to find that, on average, companies with well-educated board members are more profitable and overvalued on the market. When running the regression again to test the levels of heterogeneity, we also find that the companies with more women on board tend to be overvalued on the market, while those with more foreigners on board are subject of undervaluation. The paper mostly contributes to the literature on corporate governance and board diversity. First, we postulate the impact of each of the board diversity variables on the financial performance and then show the extent of this impact and its economic interpretation. Our findings have important practitioners' implications for corporate regulators and policy-makers since the demonstrated positive impact of the well-educated board members on firm's financial performance gives a new impetus in building a corporate strategy that will intend to engage more people holding PhD on board.

An empirical evidence on the effect of women board representation on firm performance of companies listed in Iraq Stock Exchange

“…These findings also supported agency theory, contended that the women should be included in information sharing of the board of director with the equal or high percentage of women director representative on the board results. Hence, this results are consistent with prior studies (Das & Dey 2016;Fidanoski et al, 2014;Hassan et al, 2015;Lucas-Pérez et al, 2015;Jadah, Murugiah, & Adzis, 2016;Solakoglu & Demir, 2016;Strøm et al, 2014;Toumi et al 2016).…”

Board Diversity and Earning Quality: Examining the Role of Internal Audit as a Moderator

“…In terms of nationality diversity, there are several governance guidelines which support the appointment of different nationalities on the board of directors to reflect the nationality diversity of their customers, employees and stakeholders (Fidanoski, Simeonovski, & Mateska, 2014). The appointments of foreign directors are also seen to be able to improve the quality of the decision-making within the board (Van den Berghe & Baelden, 2005;Davies, 2000).…”

“…Accordingly, more diverse board members lead to better understanding and problem solving, enabling the board to effectively address the business environment and encourage positive ratings for Corporate Social Responsibility (CSR) (Bear et al, 2010). There are several studies have examined the relationship between gender diversity and earning quality or with financial performance (Walt & Ingley, 2003;Carter et al, 2003;Carter et al, 2010;Ferdinand et al, 2011;Darmadi, 2011;Fidanoski et al, 2014;Kılıç & Kuzey, 2016;García-Sánchez et al, 2017;Gordini & Rancati, 2017).…”

“…All the independent variables are measuring in terms of proportion (ratio), as illustrated in the following: These variables have been tested in several past studies (e.g. in Walt & Ingley, 2003;Carter et al, 2003;Ayuso & Argandoña, 2007;Richard, 2000;Carter et al, 2010;Ferdinand et al, 2011;Darmadi, 2011;Fidanoski et al, 2014;Kılıç & Kuzey, 2016;García-Sánchez et al, 2017;Gordini & Rancati, 2017). To assess the dependent variable, which is the earning quality of the companies, Modified Jones Model has been used to check is there any earning being managed in the company, the bigger value of the score get in earning management, the worse the quality of the earning in the company.…”

Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis

“…A large body of academic research [1][2][3] addresses the financial outcomes of different corporate board structures. Among them, some academics (see for example [4,5]), hypothesize on the relationship between enhanced firms' boardroom independence and corporate financial performance (CFP). While some studies find a positive connection [6][7][8][9], others argue for a negative influence of board independence on CFP [10][11][12].…”