Age diversity, directors' personal values, and bank performance

Oleksandr Talavera (), Shuxing Yin and Mao Zhang

International Review of Financial Analysis, 2018, vol. 55, issue C, 60-79

Abstract: This study examines the effects of board diversity on bank profitability and risk. Using a sample of 97 Chinese banks over a period from 2009 to 2013, we find that board age diversity is negatively associated with bank profitability. To further investigate why age-diverse boards influence bank performance, we decompose board age diversity into diversity of directors' personal values, utilizing the World Values Survey. Our findings suggest that the heterogeneity among directors' views on risk, prudence, and wealth is more likely to spark intragroup conflicts in the decision-making process. This prevents the board from functioning effectively and ultimately weakens bank profitability. Our results are robust with respect to alternative measures of diversity and bank performance.

Keywords: Board of directors; Age diversity; Value diversity; Bank performance (search for similar items in EconPapers)
JEL-codes: G21 G30 J10 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (47)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:55:y:2018:i:c:p:60-79

DOI: 10.1016/j.irfa.2017.10.007

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