Board Diversity and Corporate Financial Performance：Evidence from China

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Feng, Liheng (2022) Board Diversity and Corporate Financial Performance：Evidence from China. [Dissertation (University of Nottingham only)]

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Abstract

Previous analytical literature contains conflicting views regarding the effect of board diversity on corporate performance. Thus, this study aims to examine gender, tenure, age and educational diversity on corporate boards directly correlate with firm financial performance. According to upper echelons theory and agency theory, this study hypothesised that the four above-mentioned attributes of board diversity positively influence corporate financial performance.

In this study, the formulated hypotheses are tested by using 23,079 firm-year observations in China from 2010 to 2020. The panel data analysis employs the Ordinary Least Square (OLS) approach based on the mixed-effect model. The results suggested that gender diversity had a detrimental influence on financial performance, whereas age diversity has a beneficial effect on financial performance. Meanwhile, these results remained unchanged when firm performance was calculated independently using Tobin’s Q and ROA. Additionally, the findings of this study do not show an association between tenure diversity and firm performance. In contrast, empirical evidence for degree diversity is inconsistent. The relationship between educational diversity and firm performance is negative (Tobin’s Q) and insignificant (ROA).

This study contributes to corporate governance by giving empirical evidence of the effect of gender diversity contrary to previous international evidence. Meanwhile, this study explains these results considering the unique Chinese environment and traditional culture. However, the findings of this research are subject to generalisation issues. It is challenging to generalise the outcome of this study to other countries with different cultures, legal statuses, sizes, and laws regarding corporate governance.

Item Type: Dissertation (University of Nottingham only)
Keywords: Board diversity, Corporate governance, Female directors
Depositing User: FENG, Liheng
Date Deposited: 20 Jun 2023 15:45
Last Modified: 20 Jun 2023 15:45
URI: https://eprints.nottingham.ac.uk/id/eprint/69974

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