African‐American Diversity in the Boardrooms of the US Fortune 500: director presence, expertise and committee membership

Abstract

This study examines participation of African-Americans on the boards and board committees of the US Fortune 500. Prior work suggests the use of committee assignment to discern active versus figurehead involvement on boards. We use a logistic regression model that controls for director traits, firm characteristics and director resource-dependence roles to compare the odds that a black director will be assigned to key committees to those for a white director. We find that black directors are more (less) likely than whites to sit on audit and public affairs (executive) committees. Black female directors are more likely than both white females and black males to serve on finance committees. Thus there is some evidence that race plays a role in determining assignment to corporate board committees. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance

“…Brammer, Millington, and Pavelin (2007) analyze the gender and ethnic diversity of a sample of UK companies and conclude that “board diversity is influenced by a firm's external business environment and particularly an imperative to reflect corresponding diversity among its customers.”Brammer et al (2007) find significant cross‐sector variation in gender diversity across industries while variation in ethnic diversity is much less pronounced. The empirical evidence developed by Hillman et al (2002), Peterson and Philpot (2007), and Peterson et al (2007) supports the idea that women directors and ethnic minority directors may have different functions on the board.…”

“…Jiraporn et al (2009) use the IRRC ethnicity data in their investigation. Some investigators have developed or acquired specialized ethnicity data sets but the process is so time consuming that they only have one year of data (Carter et al, 2003; Peterson et al, 2007, and Brammer et al, 2007).…”

“…The evidence on the human capital of women suggests that women are just as well qualified as men in terms of several important qualities including level of education but women are less likely to have experience as business experts (Terjesen et al, 2009). 7 Peterson et al (2007) find that African‐American directors assume different roles on the board relative to Caucasian directors which is possibly tied to their unique human capital. This appears to be the same for women directors as well (Hillman et al, 2002; Peterson, Philpot, & O'Shaughnessy 2007).…”

“…7 Peterson et al (2007) find that African‐American directors assume different roles on the board relative to Caucasian directors which is possibly tied to their unique human capital. This appears to be the same for women directors as well (Hillman et al, 2002; Peterson, Philpot, & O'Shaughnessy 2007). The net result is that human capital theory predicts that the performance of the board will be affected by board diversity as a result of diverse and unique human capital but the effect could be either positive or negative from a financial performance perspective.…”

“…However, we believe that gender diversity and ethnic diversity are not the same phenomenon and will not affect the firm in identical ways. We base this conjecture on the following: (1) previous empirical evidence on the nature of board diversity (Hillman et al, 2002; Peterson & Philpot, 2007; Peterson, Philpot, & O'Shaughnessy, 2007); (2) theory, especially resource dependence theory and human capital theory, which suggests significant differences between women directors and ethnic minority directors; and (3) the evidence presented in this analysis which suggests a difference between women directors and ethnic minority directors. Furthermore, our study is unique because we explore the relationship between the gender and ethnicity of the members of important board committees and financial performance which has not been done before.…”