Social Diversity on Corporate Boards in a Country Torn by Civil War

Kamil K. Nazliben (k.k.nazliben@tilburguniversity.edu), Luc Renneboog and Emil Uduwalage (emil@wyb.ac.lk)
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Kamil K. Nazliben: Tilburg University
Emil Uduwalage: Wayamba University of Sri Lanka

Journal of Business Ethics, 2024, vol. 194, issue 3, No 10, 679-706

Abstract: Abstract We examine how social diversity and inclusiveness on corporate boards affect corporate performance and monitoring in Sri Lanka, a country subject to decades of polarization, civil war, and even genocide. Barely more than a decade after the civil war, we find that board social diversity on the basis of ethnicity, religion, language, gender, and nationality of the board members is positively related to corporate performance, both in terms of stock market performance and accounting returns, and to corporate financial stability. The main positive effects of social diversity derive from ethno-linguistic inclusiveness. The results are confirmed by an instrumental variable approach that addresses endogeneity issues. We find no evidence that inter-personal and moral conflicts or communication problems among board members negatively affect firm performance.

Keywords: Socio-cultural diversity; Inclusiveness; Inclusion; Ethnic diversity; Gender bias; Corporate performance; CEO turnover; Corporate governance; Board of directors (search for similar items in EconPapers)
JEL-codes: G33 G34 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Social Diversity on Corporate Boards in a Country Torn by Civil War (2022)
Working Paper: Social Diversity on Corporate Boards in a Country Torn by Civil War (2022)
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DOI: 10.1007/s10551-024-05624-z

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