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Does board diversity matter? Evidence from the market reaction to directors' departures

Author

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  • Etienne Redor

    (Audencia Nantes, School of Management)

Abstract

Previous studies that have examined the impact of board diversity on firm financial performance have yielded conflicting results. One of the main challenges for studies looking at the impact of diverse directors stems from the fact that firm financial performance and board of director composition may be endogenously determined. In this paper, we propose an innovative approach to the problem of endogeneity. By analyzing the reaction of the stock market when a diverse director's departure is announced, we can examine investors' perceptions of the importance of changes in board diversity. Our results show that investors value gender diversity among directors; however, we are unable to conclude that investors value ethnic diversity among directors.

Suggested Citation

  • Etienne Redor, 2015. "Does board diversity matter? Evidence from the market reaction to directors' departures," Economics Bulletin, AccessEcon, vol. 35(2), pages 1434-1442.
    • Handle: RePEc:ebl:ecbull:eb-15-00233
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    References listed on IDEAS

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    Cited by:

    1. Etienne Redor & Magnus Blomkvist, 2022. "Are former military personnel valuable to shareholders? Evidence from boards of directors," Economics Bulletin, AccessEcon, vol. 42(3), pages 1314-1330.

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    More about this item

    Keywords

    Gender diversity; Ethnic diversity; Board of directors; Financial performance; Departure.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G0 - Financial Economics - - General

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