Do as they say or do as they do? — Uncovering the effects of inappropriate methods and unreliable data in boardroom diversity research
Publication Date
6-1-2023
Document Type
Article
Publication Title
Journal of Empirical Finance
Volume
72
DOI
10.1016/j.jempfin.2023.04.004
First Page
410
Last Page
420
Abstract
This study examines the impact of ethnic/racial and gender diversity of the board of directors on firm valuation and financial performance using hand-collected data. We show that data on boardroom diversity that is commonly used in diversity research is unreliable and differs significantly from the data reported by the companies directly. Boardroom diversity does not significantly impact firm performance, in accordance with institutional theory. This result is validated across various diversity measures, and different diversity levels. We reconcile our findings with previous literature and show that prior contradicting results are based on unreliable data and misspecified empirical designs. Companies’ utilization of boardroom diversity needs to be redesigned to leverage the benefits of diverse viewpoints in strategic decision-making, and increase firm performance.
Keywords
Boardroom diversity, Dynamic panel regression, Financial performance, Firm valuation, Hand-collected data
Department
Accounting and Finance
Recommended Citation
Franziska M. Renz, Julian U.N. Vogel, and Feixue Xie. "Do as they say or do as they do? — Uncovering the effects of inappropriate methods and unreliable data in boardroom diversity research" Journal of Empirical Finance (2023): 410-420. https://doi.org/10.1016/j.jempfin.2023.04.004
