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An Empirical Analysis of Boardroom Diversity on Firm Performance

Nisar Ahmad (), Amjad Naveed and Amna Fazal ()
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Nisar Ahmad: Sultan Qaboos University, OMAN
Amna Fazal: KPMG, Islamabad, PAKISTAN

Review of Economics & Finance, 2018, vol. 13, 62-76

Abstract: This paper analyses the effect of boardroom diversity on firm performance in terms of Return on Assets and Return on Capital Employed. More specifically, this paper focuses on three dimensions of board diversity: 1) gender diversity, 2) age of the board members, and 3) share of independent directors and executives. By doing this, we try to investigate whether diversity within the board members brings out any positive influence on the financial performance. The results show that gender and age have no significant effect on firm performance, whereas, increasing shares of independent directors and executives have a positive influence on firm performance. On the other hand, CEO duality and audit process reduce the financial performance of firms. From the policy point of view, higher share of independent directors on the board may significantly improve the financial performance of a firm.

Keywords: Directors; Firm performance; Gender diversity; Public listed companies (search for similar items in EconPapers)
JEL-codes: G30 G34 J16 (search for similar items in EconPapers)
Date: 2018
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