Guardians of resilience: unveiling the power of board diversity in mitigating financial distress

Shital Jhunjhunwala, Nitya Garg and Sonia Mudel

Afro-Asian Journal of Finance and Accounting, 2026, vol. 16, issue 4, 413-434

Abstract: Board diversity is a strategic asset for enhancing a firm's resilience in crisis. This study investigates the impact of board diversity in mitigating the probability of financial distress. The study focuses on a sample of 401 non-financial companies listed on NSE from 2018 to 2022. Dynamic panel models with a generalised method of moments were employed to explore the relationship between board diversity and financial distress. This study has focused on observed diversity (gender and age) and cognitive diversity (tenure and education) variables for a more comprehensive investigation. By considering factors such as directors' age, professional experience, and tenure during nominations, companies can build a board capable of steering it through financial challenges more adeptly.

Keywords: financial distress; board diversity; generalised method of moments; GMM; dynamic panel; Altman Z score; bankruptcy. (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ids:afasfa:v:16:y:2026:i:4:p:413-434

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