Impact of boardroom diversity on corporate financial performance

This study investigates the impact of boardroom diversity (BD) on firms' financial performance (FP), drawing on economic and resource dependency theory. The study further explores the influence of strategic change (SC) on this nexus, using a six-dimensional index to measurse BD and SC. A dataset of 240 non-financial firms listed on four stock exchanges (Moscow, Shanghai, Bombay, and Pakistan) over a 13-year period (2008-2020) is analyzed employing the generalized method of moments to address the common endogeneity problem in econometrics specification. The empirical results indicate that BD has a positive impact on FP, however, the impact is weakened by SC. The robustness of the findings is confirmed through alternative estimators. The study provides useful policy implications for managers and practitioners, suggesting that increasing BD can lead to improved FP, but careful consideration must be given to how SC may influence this connection.

Automated summary

This study uses economic and resource dependency theory to examine the impact of boardroom diversity on firms' financial performance, and explores the influence of strategic change on this relationship. The study measures boardroom diversity and strategic change using a six-dimensional index and analyzes a dataset of 240 non-financial firms listed on four stock exchanges over a 13-year period. The results show that boardroom diversity has a positive impact on financial performance, but this impact is weakened by strategic change. The robustness of the findings is confirmed through alternative estimators. The study provides useful policy implications, suggesting that increasing boardroom diversity can lead to improved financial performance, but the influence of strategic change must be carefully considered.