Is there a “business case” for board diversity?

Yi Wang and Bob Clift

Pacific Accounting Review, 2009, vol. 21, issue 2, 88-103

Abstract: Purpose - The purpose of this paper is to investigate the relationship between board diversity, as represented by the percentage of female, minority or female and minority directors on the boards of directors, and firm financial performance, and to explore the potential determinants of board diversity, using data from the Australian corporate sector. Design/methodology/approach - The paper uses the top 500 Australian companies as the initial data‐set. Firm performance measures include return on assets, return on equity and shareholder return. Several control variables are introduced in the regression analysis. Findings - The results indicate that gender and racial diversity do not have significant influence on performance. It is reported that larger firms tend to have relatively more female members, and smaller firms or firms with larger boards may have more minority directors. Research limitations/implications - The findings should not be extrapolated to all firms as the sample is restricted to listed companies. To examine the complete impact of board diversity future research could consider non‐financial performance indicators. Practical implications - The analysis shows that greater diversity does not lead to poor performance, which suggests that gender and racial diversity could be achieved without a negative effect on shareholder wealth. Originality/value - In addition to giving improved evidence on the effect of gender diversity on performance, the paper may be the first study which ascertains whether there is a “business case” for greater minority participation in boardrooms in the Australian context.

Keywords: Australia; Boards of directors; Diversity management; Company performance (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:parpps:01140580911002044

DOI: 10.1108/01140580911002044

Access Statistics for this article

Pacific Accounting Review is currently edited by Professor Tom Scott, Dr Pei-Chi Kelly Hsiao, Associate Professor Chelsea Liu, Associate Professor Sophia Su, Associate Professor Thu Phuong Truong and Dr Lily Chen

More articles in Pacific Accounting Review from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().