Corporate Governance and Diversity in Boardrooms: Empirical Insights into the Impact on Firm Performance

The book aims to analyze the corporate board diversity in all its features, focusing on the impact that the various aspects of diversity have on the performance of the firm. An increasing attention towards corporate board diversity has been given worldwide due to: i) the new requirements asked by several legislators, ii) the corporate failures and scandals occurred in the last years, especially after the 2000s, and iii) the increasing role of institutional investors in the most recent decades. Academics and practitioners have started to question the role of the board within the firm, analyzing where and when the board could not be effective at monitoring managers and at protecting the shareholders’ interests. The studies concerning the role of the board and its features have been conducted under several perspectives and theories, but no convergent results have been achieved yet. Specifically, the board diversity has been analyzed considering single specific aspects of diversity (such as gender, age, and educational level) in relation with the performance of the firm. The aim of this book is to provide a review of the types of diversity and to show the main results in terms of impact on the firm, proposed by existing literature. Moreover, the book develops an innovative approach addressed to simultaneously include all diversity features in a single conceptual framework. Finally, in order to test this model, the study presents an empirical investigation conducted on a sample of European companies, over a period of nine years. Specifically, the relationship between the diversity of the board, given by all the diversity elements (gender, age, background, level of education, nationality, role in board, directorship experience, and independence) and the performance of the firm is tested using a panel data estimation model. For the diversity aspects, indexes of diversity have been created. The firm’s performance is tested through both a market-based measure, the Tobin’s Q, and some accounting measures, namely ROE and ROA. The findings are useful primarily for academics because they enrich the existing literature with a deep study of the diversity across the European context. Nonetheless, since the work provides also evidence of the effects of the overall level of diversity on the firm performance, it can be a useful source for practitioners, too.