The Effect of Board Directors from Countries with Different Genetic Diversity Levels on Corporate Performance

Delis, Manthos D.; Gaganis, Chrysovalantis; Hasan, Iftekhar; Pasiouras, Fotios

doi:10.1287/mnsc.2015.2299

Cited by 95 publications

(90 citation statements)

References 74 publications

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“…However, prior studies suggest that TBD (gender and ethnic diversity) impacts positively on FP (e.g., Borghesi et al, 2016;Carter et al, 2003;Delis et al, 2016;Estelyi & Nisar, 2016;Gyapong et al, 2016;Ntim, 2015;Terjesen et al, 2015), voluntary CG disclosure (AlBassam et al, 2016;Elmagrhi et al, 2016;Abdulrahman et al, 2017;Elamer et al, 2017), audit quality (Gul et al, 2008), board monitoring (Triana et al, 2013), board meetings (Adams & Ferreira, 2009), dividend payout (Byoun et al, 2013), risk disclosure and social responsibility (Barako & Brown, 2008;Brammer et al, 2007;Ntim & Soobaroyen, 2013;Haque & Ntim, 2017), but negatively on executive pay (Gregory-Smith et al 2014;Newton, 2015;Ntim et al, 2015Perryman et al, 2016) and earnings management (Elghuweel et al, 2017). Observably, none of these studies relate to the charity sector and therefore, highlighting the lack of evidence.…”

Section: Charity Tbd and Csmentioning

confidence: 99%

“…Additionally, Delis et al (2016), Gyapong et al (2016) and Ntim (2015) argue that organisations with more women and ethnic minorities on their boards may be better place to improve FP by monitoring managers more closely. This implies that charities with gender/ethnically diverse boards may not need to employ higher levels of leverage in order to monitor and encourage trustees to act in line with stakeholders' interests.…”

Section: Charity Tbd and Csmentioning

confidence: 99%

“…However, the ability of firms with optimal CS to maximise FP may be contingent on CG quality and TBD. TBD, for example, may enhance charity FP by providing better linkages with the external environment (Delis et al, 2016;Pfeffer & Salancik, 1978). However, TBD may increase conflict among board members (Estelyi & Nisar, 2016;Jackson et al, 2003) and that can impact negatively on the ability of boards to make optimal decisions regarding CS and thus charity's FP.…”

Section: The Moderating Effect Of Tbd and Cg Quality On The Cs-fp Nexusmentioning

confidence: 99%

“…Indeed, recent global debate and public policy, especially in the EU, UK and Scandinavian countries has sought to affirmatively increase diversity in corporate boards. It is argued that board gender and ethnic diversity can enhance managerial monitoring and board independence by bringing diverse ideas, perspectives and knowledge into board decision-making (Adams & Ferreira, 2009;Carter et al, 2003Carter et al, , 2010Delis et al, 2016;Elmagrhi et al, 2016;Estelyi & Nisar, 2016;Gyapong et al, 2016;Loukil & Yousfi, 2015;Triana et al, 2013). The increased monitoring and independence often associated with diverse boards may enhance legitimacy and trustworthiness of the board, and consequently encourage stakeholders to provide support to charities, including finance (Ntim & Soobaroyen, 2013;Perrault, 2015;Terjesen & Sealy, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Elmagrhi

Ntim

Malagila

et al. 2018

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Purpose: We investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) using a sample of UK charities. Specifically, we investigate the effect of TBD on CS, and ascertain whether CG quality moderates the TBD-CS nexus.Additionally, we examine the impact of CS on FP, and ascertain whether the CS-FP nexus is also moderated by TBD and CG quality.Design/methodology/approach: We employ a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares to rigorously analyse the data and test the hypotheses.Findings: First, we find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. We find similar, but relatively weak results for the presence of Black, Asian and Minority Ethnic trustees. Second, we find that the TBD-CS nexus depends on the quality of CG with the relationship being stronger in charities with higher frequency of meetings, independent CG committee, and larger trustee and audit firm size. Third, we find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. Our evidence is robust to different econometric models that adjust for alternative measures and endogeneities. We interpret our findings within the explanations of a theoretical perspective that captures insights from different CG and CS theories. Originality/value: Existing studies on TBD, CG, CS and FP in charities are rare. Our study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, we provide new evidence on the relationship between TBD and CS.Second, we offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, we provide new evidence on the effect of CS on FP. Finally, we offer new evidence on the moderating effect of TBD and CG on the CS-FP nexus.

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Section: Charity Tbd and Csmentioning

confidence: 99%

Section: Charity Tbd and Csmentioning

confidence: 99%

Section: The Moderating Effect Of Tbd and Cg Quality On The Cs-fp Nexusmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Elmagrhi

Ntim

Malagila

et al. 2018

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“…We follow recent literature of corporate governance (Berger, Kick, and Schaeck, 2014;Berger et al, 2013;García-Meca et al, 2015;Delis, Gaganis, Hasan, and Pasiouras, 2016) and measure the diversity of banks' executive board structure with Board Diversity (ln), which was introduced by Anderson, Reeb, Upadhyay, and Zhao (2011) and implemented for German banks by Berger et al (2013). Our board diversity considers the banks' board dimensions in age, gender, education (measured by academic degrees), and job experience (computed by tenure).…”

Section: Spreadtmentioning

confidence: 99%

Do all new brooms sweep clean? Evidence for outside bank appointments

Kick

Nehring

Schertler

2017

Journal of Banking & Finance

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We investigate whether bank executive directors appointed from outside the bank ("outsiders") improve post-succession performance and whether some outsiders are better predisposed than others to turn around a bank's performance. In the case of banks, this question is highly relevant because regulatory authorities may regard the replacement of the management team as a chance to clean up financially distressed banks. Our sample compromises all universal banks for the period 1993 to 2014. ContributionFirst, the results of our study contribute to the existing literature on the post-succession effects of executive turnovers by documenting a performance differential between outsiders with strong and poor managerial abilities in the years following their appointment. Second, we add to the literature examining managerial ability by extracting managerial ability from the risk-return efficiency of executive directors' previous banks. Third, we add to the literature dealing with the financial crisis by measuring the performance effects separately for the pre-and post-crisis period. ResultsOur study documents the negative performance effects in the years following the appointment of an outsider on banks making such appointments. We find that executives with poor managerial abilities ("bad outsiders") underperform at their new banks during the post-appointment period whereas executives with strong managerial abilities ("good outsiders") do so only at the very beginning of the post-appointment period. Thus, not all executive directors appointed from outside are equally capable of improving bank performance. Our results further suggest that the performance differential between good and bad outsiders strengthens in the post-crisis period. We systematically rule out that these performance differentials following external appointments are driven by appointing good outsiders to boards of banks with a low risk exposure. Banks in bad financial shape are more likely to appoint executive directors from the outside than those in good shape. It is, however, not clear whether all of these appointments necessarily lead to the desired turnaround. We analyze the performance effects of new board members with external boardroom experience (outsiders) by distinguishing between good and bad managerial abilities of executives based on either ROA or risk-return efficiency of their previous employers. Our results show that banks appointing bad outsiders underperform other banks while those appointing good outsiders do so to a lesser extent. The performance differentials are highly pronounced in high-risk banks and in the post-crisis period.

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The virtuous cycle of diversity

Srikant

Pichler

Shafiq

2020

Human Resource Management

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Based on propositions from the resource dependency theory (RDT), we seek to understand how firms respond to social performance problems through diversity. We consider the impact of negative customer and employee incidents as social performance problems because these incidents represent two critical stakeholders, and because of the potential for such problems to cause a wider impact on the affected firms. Using firm-level longitudinal data across four-time points and a crosslagged panel model (CLPM) to test our hypotheses, as well as a variety of supplemental analyses, we find that social performance problems relate to increases in board diversity. We also find that social performance problems act as a trigger for a virtuous cycle such that increases in board diversity are related to the subsequent adoption of diversity management practices, which are related to subsequently higher levels of board diversity. We contribute to the theory on diversity management by demonstrating how firms seek diversity as a response to social performance problems. Further, we connect board diversity to the adoption of diversity management practices, which are often studied independently, and demonstrate the mutually positive influence they have on each other. We discuss implications for theory and human resource management. K E Y W O R D Sboard diversity, corporate social responsibility, diversity management, diversity management practices, resource dependency theory, social performance problems "Often what a woman or minority person can bring to the board is some perspective a company has not had before-adding some modern-day reality to the deliberation process. Those perspectives are of great value, and often missing from an all-white, male gathering. They can also be inspirational to the company's diverse workforce" (Robert Campbell, CEO of Sun Oil)We live and work in a more diverse environment today than ever before. The labor force of the United States and other industrialized countries is increasingly diverse in terms of race and ethnicity, gender, and age, among other dimensions (e.g., Roberson, 2012;Truxillo, Fraccaroli, Yaldiz, & Zaniboni, 2017). By 2039, the majority of the workforce in the U.S. will be comprised of racioethnic minorities (Treuhaft, Blackwell, & Pastor, 2011). A variety of macro-level trends from globalization to technological advancement and global labor force migration are related to the increasing multiculturalism of the modern workplace (Kossek & Pichler, 2007). As a reflection of this multiculturalism, women and racioethnic minorities continue to make strides in terms of representation in top management positions and on corporate boards (e.g., Torchia, Calabrò, & Huse, 2011). Human resource management scholars and business firms have touted the importance of board diversity for firm performance (Boulouta, 2013;Kossek & Pichler, 2007;Richard, 2000). Some firms in the United States have adopted diversity statements promoting demographic diversity for their boards (see Carter, Simkins, & Simpson, 2003), ...

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The Effect of Board Directors from Countries with Different Genetic Diversity Levels on Corporate Performance

Cited by 95 publications

References 74 publications

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Do all new brooms sweep clean? Evidence for outside bank appointments

The virtuous cycle of diversity

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