Diverse boards: why do firms get foreign nationals on their boards?
Diverse boards: why do firms get foreign nationals on their boards?
Corporate boards are the focal points for strategy and investment related firm decisions, and hence they embody the key features of production and management. In this paper, using a unique dataset of listed firms, we examine the determinants of board diversity based on directors’ nationalities and ask whether the presence of foreign directors on boards contributes in some way to firm governance and performance. Our results show that boards containing diverse nationalities are positively and significantly associated with shareholder heterogeneity and the firm’s international market operations. Nationality diversity is also positively related to operating performance. Moreover, as we find, institutions relating to investor engagement play an important role in influencing the nature and consequences of board diversity.
director nationality, diversity, institutions, shareholder hetergeneity, board governance, performance
174-192
Estélyi, Kristína Sághy
899a22ce-a061-4810-925c-edca403f23a2
Nisar, Tahir M.
6b1513b5-23d1-4151-8dd2-9f6eaa6ea3a6
1 August 2016
Estélyi, Kristína Sághy
899a22ce-a061-4810-925c-edca403f23a2
Nisar, Tahir M.
6b1513b5-23d1-4151-8dd2-9f6eaa6ea3a6
Estélyi, Kristína Sághy and Nisar, Tahir M.
(2016)
Diverse boards: why do firms get foreign nationals on their boards?
Journal of Corporate Finance, 39, .
(doi:10.1016/j.jcorpfin.2016.02.006).
Abstract
Corporate boards are the focal points for strategy and investment related firm decisions, and hence they embody the key features of production and management. In this paper, using a unique dataset of listed firms, we examine the determinants of board diversity based on directors’ nationalities and ask whether the presence of foreign directors on boards contributes in some way to firm governance and performance. Our results show that boards containing diverse nationalities are positively and significantly associated with shareholder heterogeneity and the firm’s international market operations. Nationality diversity is also positively related to operating performance. Moreover, as we find, institutions relating to investor engagement play an important role in influencing the nature and consequences of board diversity.
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Accepted/In Press date: 16 February 2016
e-pub ahead of print date: 24 February 2016
Published date: 1 August 2016
Keywords:
director nationality, diversity, institutions, shareholder hetergeneity, board governance, performance
Organisations:
Southampton Business School
Identifiers
Local EPrints ID: 390549
URI: http://eprints.soton.ac.uk/id/eprint/390549
ISSN: 0929-1199
PURE UUID: 0193325a-8414-44ed-a00c-916ac9497599
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Date deposited: 04 Apr 2016 12:56
Last modified: 15 Mar 2024 05:27
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Author:
Kristína Sághy Estélyi
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