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Board diversity reforms: Do they matter for EU bank performance?

Author

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  • Francesca Arnaboldi
  • Barbara Casu
  • Elena Kalotychou
  • Anna Sarkisyan

Abstract

We examine the impact of governance reforms related to board diversity on the performance of European Union banks. Using a difference‐in‐difference approach, we document that reforms increase bank stock returns and their volatility within the first 3 years after their enactment. The type of reform matters, with quotas increasing return volatility. The effectiveness of reforms depends on a country's institutional environment. The impact of reforms on return volatility is found to be beneficial in countries more open to diversity, with common law system and with greater economic freedom. Finally, reforms play a bigger role in banks that have ex ante less heterogeneous boards.

Suggested Citation

  • Francesca Arnaboldi & Barbara Casu & Elena Kalotychou & Anna Sarkisyan, 2020. "Board diversity reforms: Do they matter for EU bank performance?," European Financial Management, European Financial Management Association, vol. 26(2), pages 416-454, March.
    • Handle: RePEc:bla:eufman:v:26:y:2020:i:2:p:416-454
    DOI: 10.1111/eufm.12238
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    Cited by:

    1. Mehmet Maksud Onal & John K. Ashton, 2021. "Is the Journey more Important than the Destination? EU Accession and Corporate Governance and Performance of Banks," Journal of Common Market Studies, Wiley Blackwell, vol. 59(6), pages 1516-1535, November.
    2. Tampakoudis, Ioannis & Nerantzidis, Michail & Eweje, Gabriel & Leventis, Stergios, 2022. "The impact of gender diversity on shareholder wealth: Evidence from European bank M&A," Journal of Financial Stability, Elsevier, vol. 60(C).
    3. Del Prete, Silvia & Papini, Giulio & Tonello, Marco, 2024. "Gender quotas, board diversity and spillover effects. Evidence from Italian banks," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 148-173.
    4. Nitesh Pandey & Satish Kumar & Corinne Post & John W. Goodell & Rebeca García-Ramos, 2023. "Board gender diversity and firm performance: A complexity theory perspective," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 1289-1320, September.
    5. Liao, Rose C. & Loureiro, Gilberto & Taboada, Alvaro G., 2022. "Gender quotas and bank risk," Journal of Financial Intermediation, Elsevier, vol. 52(C).
    6. Stefano Piserà, 2024. "Gendered language and board diversity: Evidence from European banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3083-3102, July.
    7. Saleh F. A. Khatib & Dewi Fariha Abdullah & Ahmed A. Elamer & Raed Abueid, 2021. "Nudging toward diversity in the boardroom: A systematic literature review of board diversity of financial institutions," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 985-1002, February.
    8. Lawrence Loh & Thi Thuy Nguyen & Annette Singh, 2022. "The Impact of Leadership Diversity on Firm Performance in Singapore," Sustainability, MDPI, vol. 14(10), pages 1-14, May.
    9. Huang, Yichu & Fang, Feifei & Fan, Yaoyao & Ly, Kim Cuong, 2024. "Do ‘Lehman Sisters’ work in China? Women on boards and bank risk," International Review of Financial Analysis, Elsevier, vol. 93(C).
    10. Arnaboldi, F. & Casu, B. & Gallo, A. & Kalotychou, E. & Sarkisyan, A., 2021. "Gender diversity and bank misconduct," Journal of Corporate Finance, Elsevier, vol. 71(C).
    11. Tampakoudis, Ioannis & Noulas, Athanasios & Kiosses, Nikolaos, 2022. "The market reaction to syndicated loan announcements before and during the COVID-19 pandemic and the role of corporate governance," Research in International Business and Finance, Elsevier, vol. 60(C).
    12. Andrea Bellucci & Gianluca Gucciardi & Rossella Locatelli & Cristiana Schena, 2022. "Gender Gap in Business Angel financing," Mo.Fi.R. Working Papers 175, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    13. Lisa D. Cook & Linguère Mously Mbaye & Janet Gerson & Anthony Simpasa, 2021. "Working Paper 358 - The Colonial Origins of Banking Crisis in Africa," Working Paper Series 2484, African Development Bank.

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