Corporate Governance, Board Diversity, and Firm Value

This study examines the relationship between board diversity and firm value for Fortune 1000 firms. Board diversity is defined as the percentage of women, African Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence e...

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Bibliographic Details
Published in:The Financial review (Buffalo, N.Y.) N.Y.), 2003-02, Vol.38 (1), p.33-53
Main Authors: Carter, David A., Simkins, Betty J., Simpson, W. Gary
Format: Article
Language:English
Subjects:
board of directors
Boards of directors
Corporate governance
diversity
Financial performance
financial value
Multiculturalism & pluralism
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Summary:This study examines the relationship between board diversity and firm value for Fortune 1000 firms. Board diversity is defined as the percentage of women, African Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence examining whether board diversity is associated with improved financial value. After controlling for size, industry, and other corporate governance measures, we find significant positive relationships between the fraction of women or minorities on the board and firm value. We also find that the proportion of women and minorities on boards increases with firm size and board size, but decreases as the number of insiders increases.
ISSN:0732-8516
1540-6288
DOI:10.1111/1540-6288.00034