Ntim, Collins G.
Board diversity and organizational valuation in South Africa: unravelling the effects of ethnicity and gender. Southampton, GB, University of Southampton
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Organizational boards of directors are one of the most important subgroups within most modern organizations. This paper investigates the crucial policy question of whether the stock market values ethnic and gender diversity within South African organizational boards using a sample of 169 publicly listed organizations from 2002 to 2007. We find that board diversity is positively associated with market valuation. We distinctively demonstrate further that ethnic diversity is valued more highly by the stock market than gender diversity. By contrast, we do not find any evidence of a significant non-linear link between board diversity and market valuation. Our findings are robust across a number of econometric models that deal with different types of endogeneities and market valuation measures. Overall, our results are consistent with agency and resource dependence theoretical predictions.
Keywords Organizational governance, organizational valuation, board diversity, ethnicity and gender, South Africa, endogeneity
JEL Classification G30, G32, G34, G38
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