Diverse boards: Why do firms get foreign nationals on their boards?

Kristína Sághy Estélyi and Tahir M. Nisar

Journal of Corporate Finance, 2016, vol. 39, issue C, 174-192

Abstract: Corporate boards are the focal points for strategy and investment related firm decisions, and hence they embody the key features of production and management. In this paper, using a unique dataset of listed firms, we examine the determinants of board diversity based on directors' nationalities and ask whether the presence of foreign directors on boards contributes in some way to firm governance and performance. Our results show that boards containing diverse nationalities are positively and significantly associated with shareholder heterogeneity and the firm's international market operations. Nationality diversity is also positively related to operating performance. Moreover, as we find, institutions relating to investor engagement play an important role in influencing the nature and consequences of board diversity.

Keywords: Director nationality; Diversity; Institutions; Shareholder heterogeneity; Board governance; Performance (search for similar items in EconPapers)
JEL-codes: G30 G34 J16 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (62)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:39:y:2016:i:c:p:174-192

DOI: 10.1016/j.jcorpfin.2016.02.006

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