National board heterogeneity versus firm risk in times of war: Evidence from the Crimean crisis

Katarzyna Byrka-Kita, Mateusz Czerwiński, Agnieszka Preś-Perepeczo and Aurelia Bajerska

International Review of Financial Analysis, 2025, vol. 104, issue PA

Abstract: This study examines the impact of national board heterogeneity on firm risk during periods of geopolitical instability by focusing on non-financial companies listed in Estonia, Latvia, Lithuania, and Poland following Russia's annexation of Crimea in 2014. Drawing on resource dependency, agency, and critical mass theories, we highlight the dual-edged nature of board heterogeneity. Although diverse boards provide access to broader perspectives and strategic resources, they may introduce coordination and communication challenges that elevate risk, particularly in volatile environments. We find that a higher share and diversity of foreign board members is associated with increased idiosyncratic risk.

Keywords: National board heterogeneity; Firm risk; Geopolitical risk; Critical mass theory; Corporate governance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003771

DOI: 10.1016/j.irfa.2025.104290

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