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Does board ethnic diversity mitigate bankruptcy risk?

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  • Cho, Eunho
  • Hashemi Joo, Mohammad

Abstract

We investigate the relationship between the ethnic diversity of corporate boards, measured by the ratio of minority directors, and bankruptcy risks among manufacturing firms included in S&P 1500. Our findings indicate that companies with a higher representation of minority directors on their boards demonstrate decreased bankruptcy risks compared to companies with lower levels of minority board diversity. This study implies that boards with diverse ethnic backgrounds are better equipped to make balanced decisions and manage bankruptcy risks.

Suggested Citation

  • Cho, Eunho & Hashemi Joo, Mohammad, 2024. "Does board ethnic diversity mitigate bankruptcy risk?," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pa:s1057521924005209
    DOI: 10.1016/j.irfa.2024.103588
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    More about this item

    Keywords

    Board ethnic diversity; Board diversity; Bankruptcy; Minority directors;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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