Gender and Cultural Board Diversity: Examining its Impact on Corporate Misconduct
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2025-07-04
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en
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Corporate misconduct is rising, affecting firms, stakeholders, and society. Effective corporate governance mechanisms can reduce such misconduct. Therefore, this study examines the impact of gender board diversity (GBD) and cultural board diversity (CBD) on the frequency and severity of corporate misconduct among US multinationals over the period 2000-2024, with a special focus on the period after the financial crisis. A Negative Binomial model is used to examine the frequency expressed in number of fines. Severity is measured in terms of total monetary value, using a Pooled OLS model. The results suggest a 10% increase in GBD is associated with a 5.14% reduction in the number of fines. While initially weak, additional analysis confirm the relationship. CBD, based on Hofstede’s cultural dimensions, is associated with a 1.29% reduction in number of fines, with a stronger effect after the financial crisis. No evidence suggests that GBD and CBD reduce the severity of violations. However, using Nationality Mix as an alternative measure for CBD, reduces the total value of fines by 5.38%, when Nationality Mix increases by 10%. The joint effect of GBD and CBD does not significantly influence the frequency and severity of corporate misconduct. These findings broaden the literature on board diversity and provide policymakers with insights into the influence of GBD and CBD on corporate misconduct, supporting the Upper Echelons, Stakeholder and Agency theory.
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Faculteit der Managementwetenschappen