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Board Diversity and Outward FDI: Evidence from Europe

Valeria Gattai, Piergiovanna Natale and Francesca Rossi ()

No 491, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: Employing firm-level panel data from 2011 to 2015, we investigate the relationship between board diversity and outward foreign direct investment (OFDI) among firms headquartered in Europe. Previous studies suggest that best-performing firms self-select into OFDI and that board diversity affects firm performance and strategic decisions. Our focus is on board diversity in terms of gender and nationality as determinants of OFDI. After controlling for endogeneity using instrumental variables and control function methods, we find that board diversity positively affects OFDI by increasing firm performance; however, firms with more diverse boards are less likely to open foreign subsidiaries. Our findings also reveal that the negative effect of board diversity on OFDI is stronger in more productive firms.

Keywords: Board diversity; Outward Foreign Direct Investment (OFDI); Foreign Direct Investment (FDI); Firm performance; Europe (search for similar items in EconPapers)
JEL-codes: F23 G30 J16 (search for similar items in EconPapers)
Pages: 50
Date: 2022-03, Revised 2022-03
New Economics Papers: this item is included in nep-bec, nep-eff, nep-gen, nep-hrm, nep-int, nep-lab and nep-sbm
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