The authors investigate the relationship between board ethnic diversity, ethnicity and market, and book measures of firm financial performance using Malaysian data. This represents a departure from prior studies that focused on White countries whose people remain culturally indistinct. Ethnic diversity is measured by the Herfindahl-Hirschman Index; ethnicity is the largest representation of a single race. Controlling for firm-and board-specific attributes, the authors find a significant positive relationship between ethnic diversity and firm financial performance and that financial performance of companies differ between ethnicities. The results suggest that despite modernization and homogenization, corporate Malaysia is still divided along racial lines.

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