Board diversity and the financial performance of firms - a quantitative examination: Board diversity and the financial performance of firms
Author
Byrith, Signe Bredsgaard
Term
4. term
Education
Publication year
2024
Pages
132
Abstract
This thesis examines the extent to which board diversity is associated with firms’ financial performance. Responding to mixed evidence in the corporate governance literature, it uses panel data on Danish firms from 2017–2019 (after data cleaning). Diversity is measured via the Shannon index, the share of women and the share of ethnic minorities on boards, as well as dummy variables indicating increases in the number of women or ethnic minority members. A total of 12 OLS regression models are estimated within a theoretical framework combining resource dependence theory, human capital theory, and critical mass/token theory. The models control for key characteristics such as firm size, board size, firm age, revenue, industry, and workforce composition (average education, tenure, and salary). The results indicate a statistically significant negative association between board diversity and financial performance, while increases in diversity show no significant association with performance. Robustness checks support the main pattern, and potential endogeneity concerns are discussed. Overall, the study concludes that a clear-cut answer to the research question is not possible, highlighting the need for nuanced interpretation and further research.
Dette speciale undersøger i hvilket omfang bestyrelsesdiversitet hænger sammen med virksomheders økonomiske resultater. Med udgangspunkt i den blandede evidens i corporate governance-litteraturen anvendes paneldata for danske virksomheder i perioden 2017–2019 (efter datarensning). Diversitet måles ved Shannon-indekset, andelen af kvinder og andelen af etniske minoriteter i bestyrelsen samt dummyvariable for stigende antal kvinder eller etniske minoriteter. I alt estimeres 12 OLS-regressionsmodeller inden for en teoretisk ramme baseret på resource dependence-teori, humankapitalteori og kritisk masse-/token-teori. Modellerne kontrollerer for centrale karakteristika som virksomhedsstørrelse, bestyrelsesstørrelse, virksomhedsaldre, omsætning, branche samt medarbejdersammensætning (gennemsnitligt uddannelsesniveau, anciennitet og løn). Resultaterne peger på en statistisk signifikant negativ sammenhæng mellem bestyrelsesdiversitet og økonomisk performance, mens en stigning i diversiteten ikke er signifikant relateret til performance. Robusthedsanalyser understøtter hovedmønstret, og potentielle endogenitetsudfordringer drøftes. Den overordnede konklusion er, at et entydigt svar på problemstillingen ikke kan gives, hvilket understreger behovet for nuancerede fortolkninger og yderligere forskning.
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