The effect of board diversity on corporate innovation and financial performance
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2022-08-22
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en
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Abstract
This research examines how board gender and nationality diversity influence corporate input into innovation and financial performance. To attain this goal, the research considers a sample of 577 European companies in the time frame 2016-2020 and employs panel data analysis. The findings support the assertions of resource dependence, human capital, and agency theories suggesting that board gender diversity is positively related to return on assets (ROA). However, this result is obtained in the presence of a moderator, namely R&D intensity (corporate innovation input). Further, empirical evidence is found that managerial expertise of nationality diverse boards increases corporate innovation input. The obtained results are tested for robustness with addressing potential endogeneity concerns. The findings suggest that appointing more gender and nationality diverse boards is not solely a question of equality and social justice but have economically justifiable reasons. This study contributes to the ongoing research on corporate governance and may be applicable to shareholders to enrich corporate governance and gain economic benefits and policymakers to acknowledge and advocate in favor of board diversity.
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Faculteit der Managementwetenschappen