Demographic Diversity in the Boardroom: Evidence from Borsa Istanbul

Abstract

This study investigates demographic diversity in the boards of public firms quoted at Borsa Istanbul. The findings show that female directors are neither less educated nor less professionally qualified than male directors. However, consistent with the glass ceiling arguments, the percentage of female directors that are CEOs or chairmen is lower compared to male directors. Also, a lower percentage of them are independent and serve on audit committees. The findings also show that a lower percentage of foreign directors are independent, busy and serve on audit committees compared to Turkish directors. In addition, directors that are CEOs, busy directors or independent directors are younger. However, chairmen of firms are older. Lastly, the findings show that firms with foreign directors have lower total advice quality, compared to firms with no foreign directors. However, firms with female directors do not have a significantly different advice quality, compared to firms with no female directors.

Different is Better: Does Difference in Age and Ethnicity of the Directors Matter for Corporate Performance in Malaysia?

“…By referring to previous studies, the findings have an explanation that senior directors by their experience and ability to oppose managements' decisions particularly in regard with risky projects enhance shareholders' confidence as reflected by an increase in share market price (Demeke 2016;Francis, Hasan, and Wu 2012). Also, the findings could be explained in that shareholders consider senior directors on the board as safe hands for managing risks (Arioglu, 2015;Nguyen & Nielsen, 2014) and improving firms' overall efficiency (Demeke, 2016;Francis et al, 2012). The findings are consistent with many previous studies (Anju, 2020;Demeke, 2016;Ezeanyim, 2020;Francis et al, 2012;Jonson et al, 2020).…”

“…Also, they improve firms' overall efficiency, market value, and shareholders' confidence (Demeke, 2016;Francis et al, 2012). Accordingly, the death (Nguyen & Nielsen, 2014) or retirement of senior directors decrease share market price (Arioglu, 2015). Whilst, young directors have negative impacts on firms' financial performance (Ahern & Dittmar, 2012;Smith-Meyer, 2013) and market value (Adams & Ferreira, 2009;Vania & Supatmi, 2014).…”

Board Level Gender Diversity and Firm Financial Performance - Evidence from India

“…One of the many roles played by women is being the manager and the decision maker of a business corporation. However, a stagnant growth has been seen in the representation of women in the upper echelons of business organizations (Arioglu, 2015). According to an Egon Zehnder (EZ) report, 2016 on gender diversity on Indian boards, India lags behind in appointment of women as directors on boards, and also as executive directors and Chief Financial Officers.…”

Educated Professionals on Boards at Borsa Istanbul

“…They could also provide the negative effects such as board members treating other boards members as out-group individuals, or the existence of potential conflicts and communication problems (Shin, 2012;Arioglu, 2014).…”

“…Directors from various educational backgrounds could potentially provide positive effects of diversity in the boardroom such as enhanced creativity, different perspectives on important corporate issues, and distinct and unique sets of skills and leadership (Burgess and Tharenous, 2002;Carter et al, 2003;Arfken et al, 2004;Peterson and Philpot, 2007;Anderson et al, 2011;Dobbin and Jung, 2011). They could also provide the negative effects such as board members treating other boards members as out-group individuals, or the existence of potential conflicts and communication problems (Shin, 2012;Arioglu, 2014).…”