Board diversity and firm performance in the U.S. tourism sector: The effect of institutional ownership |
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| Institution: | 1. Bentley University, Waltham, MA, USA;2. Senior Fellow, The Wharton School, University of Pennsylvania, Philadelphia, PA 19104, USA;3. School of Business Administration and Economics, State University of New York at Brockport, Brockport, NY 14420, USA;4. School of Economics and Management, Fuzhou University, Fuzhou, China |
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| Abstract: | This study examines the relationship between board diversity and firm performance in the U.S. tourism sector by using institutional ownership as a contingency that moderates this relationship. The study's sample includes publicly-traded companies from the U.S. restaurant, hotel and airline industries. The hypotheses are tested via two-way fixed-effects regression, and the findings of the study indicate that board diversity is positively associated with financial performance (Tobin's Q), and the effect of board diversity on performance is contingent on the degree of institutional ownership. More precisely, the study finds that board diversity has a larger effect on financial performance when institutional ownership is low on a tourism firm's ownership structure. Overall, the findings suggest that boards' internal control and monitoring on management is important to derive higher financial performance, and even yet it is more important when external monitoring by institutional owners, proxied by percentage of institutional ownership, is weak. |
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| Keywords: | Governance Board of directors Board diversity Institutional ownership Firm performance |
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