Which Demographic Characteristics of Directors Affected the Company Risk Level?

Abstract

The board of directors is a group of people whose decision making can affect company life. In particular, the decision to have more liabilities than equity capital, makes a firm more aggressive than others in the market. The aim of this paper is to test the relationship between some demographic characteristics of directors and the firm's propensity to risk. In particular our analysis consider gender, age of the directors, independence and educational level. Moreover work experiences are considered. The results obtained should be considered by regulators and firm statutes as guidelines for future board composition.

Relationship between governance diversity and company growth: Evidence from the FT 1000 Europe's fastest growing companies

“…Audretsch and Lehmann (2006) demonstrated a positive relationship between directors with academic backgrounds and the competitive advantage of firms, especially with reference to access to and absorption of external knowledge spillovers. With reference to Italian listed companies, Lippi and Di Battista (2017) demonstrate that the presence of more directors with degrees in Law and Economics makes companies less aggressive. Moreover, the concentration of directors with degrees in Economics tends to make the BoD more conservative in decision‐making.…”