The Role of Age and Gender Diversity on Risk Appetite in Corporate Boardrooms: The European Case

Abstract

This thesis investigates how gender and age diversity impact risk appetite in S&P Europe 350 boardrooms, using methods like Ordinary Least Squares, Fixed Effects, and Quantile Regressions on a 2005-2022 sample of 227 firms. Theoretically, diversity is expected to reduce risk appetite due to benefits like broader networks and improved decision-making. Regression coefficients reveal that gender diversity reduces risk appetite, indicating more women on boards foster risk aversion, evidenced by increased returns and decreased debt. Furthermore, gender diversity enhances innovation. However, age diversity surprisingly increases risk appetite, with diverse boards having higher debts and lower returns. In addition to enriching current understandings of board diversity's impact on firm risk appetite, the application of quantile-specific regressions constitutes an innovative contribution to the field as it enables measuring effects across the population.

Keywords: Age Diversity, Board of Directors, Gender Diversity, Quantile Regressions, Risk Appetite, S&P Europe 350