Simultaneous board and CEO diversity: does it increase firm value? |
| |
| Authors: | Richard Borghesi Kiyoung Chang Jamshid Mehran |
| |
| Institution: | 1. College of Business Administration, University of South Florida, Sarasota, FL, USA;2. School of Business and Economics, Indiana University South Bend, South Bend, IN, USA |
| |
| Abstract: | There remain open questions regarding whether board of director ethnic and gender diversity increases or decreases firm value. Additionally, prior research has yet to examine the value effects of a diverse board in the presence of a gender/ethnic minority CEO. Using the KLD social ratings database, we examine 13?000 firm-years and provide robust evidence that board diversity increases firm value. However, we also show that any value added via board diversity is nullified when a diverse board operates in the presence of a female and/or minority CEO. Results suggest that a significant portion of the value in board diversity may come from gender/ethnic differences between the board members and the CEO. One implication of our study is that when hiring a CEO or electing directors relative gender/ethnic make-up is important. |
| |
| Keywords: | Gender ethnic minority diversity board of directors CEO |
|
|
