TY - JOUR
T1 - An empirical analysis of boardroom diversity on firm performance
AU - Ahmad, Nisar
AU - Naveed, Amjad
AU - Fazal, Amna
N1 - Funding Information:
In order to carry our research out, we had collected the financial ratios and the data of the board of directors from the annual reports of 2013 for a sample of 154 companies in the FTSE 350 listed on the London Stock Exchange. The results of earlier studies coincide with the findings of this study on this topic. Nonetheless, we found no significant relationship between the percentage of females on the board with the financial performance indicators of ROA and ROCE, and the same is applicable for directors less than 45 years of age. However, the percentage of independent directors, percentage of executive shares, CEO duality and Audit by Big 4 firms were found to affect the financial ratios of the company. Hence, from the theories discussed earlier, agency theory has been supported by our results whereas no evidence was found to support the additional theories.
PY - 2018/1/1
Y1 - 2018/1/1
N2 - This paper analyses the effect of boardroom diversity on firm performance in terms of Return on Assets and Return on Capital Employed. More specifically, this paper focuses on three dimensions of board diversity: 1) gender diversity, 2) age of the board members, and 3) share of independent directors and executives. By doing this, we try to investigate whether diversity within the board members brings out any positive influence on the financial performance. The results show that gender and age have no significant effect on firm performance, whereas, increasing shares of independent directors and executives have a positive influence on firm performance. On the other hand, CEO duality and audit process reduce the financial performance of firms. From the policy point of view, higher share of independent directors on the board may significantly improve the financial performance of a firm.
AB - This paper analyses the effect of boardroom diversity on firm performance in terms of Return on Assets and Return on Capital Employed. More specifically, this paper focuses on three dimensions of board diversity: 1) gender diversity, 2) age of the board members, and 3) share of independent directors and executives. By doing this, we try to investigate whether diversity within the board members brings out any positive influence on the financial performance. The results show that gender and age have no significant effect on firm performance, whereas, increasing shares of independent directors and executives have a positive influence on firm performance. On the other hand, CEO duality and audit process reduce the financial performance of firms. From the policy point of view, higher share of independent directors on the board may significantly improve the financial performance of a firm.
KW - Directors
KW - Firm performance
KW - Gender diversity
KW - Public listed companies
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M3 - Article
AN - SCOPUS:85068572699
VL - 13
SP - 62
EP - 76
JO - Review of Economics and Finance
JF - Review of Economics and Finance
SN - 1923-7529
IS - 3
ER -