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The role of caste for board membership, CEO, and interlocking

Ajit Dayanandan, Han Donker and John Nofsinger

Pacific-Basin Finance Journal, 2019, vol. 54, issue C, 29-41

Abstract: We examine the caste affiliation of corporate leadership in India. We find that the affirmative action policies targeted to the public sector have not filtered into the private sector. Indian boards are not very diverse—usually dominated by directors from a single caste. Boards dominated by one caste also tend to have a CEO from the same caste, putting into question how independent some directors may be. Over one third of the directors are interlocked by holding multiple directorships. However, this interlocking is done with firms dominated by the same caste. Therefore, Indian corporate leadership fails to obtain the benefits of having directors with weak social ties. The lack of caste diversity in boards, CEOs, and interlocks are all associated with lower firm value.

Keywords: Caste; Boards; CEO; Interlocks; Strength of weak ties; Firm value (search for similar items in EconPapers)
JEL-codes: G30 N16 O25 Z13 (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:eee:pacfin:v:54:y:2019:i:c:p:29-41