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Board tenure diversity and investment efficiency: A global analysis

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  • Tran Phuong, Thao
  • Le, Anh-Tuan
  • Ouyang, Puman

Abstract

Using an international sample of firms in 45 countries, we find that board tenure diversity is positively associated with investment efficiency. We alleviate concerns about endogeneity by using a firm fixed effects model, a two-stage least squares regression, and a matching approach. Additional analyses show that the relationship between board tenure diversity and investment efficiency is stronger when the directors have longer tenure and when firms face financial constraints. In addition, better institutional quality, greater shareholder protection, and higher societal trust positively moderate the beneficial impact of board tenure diversity on investment efficiency. Overall, our results highlight the benefits of board tenure diversity in regards to work group diversity and access to resources when making corporate investment decisions.

Suggested Citation

  • Tran Phuong, Thao & Le, Anh-Tuan & Ouyang, Puman, 2022. "Board tenure diversity and investment efficiency: A global analysis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:intfin:v:81:y:2022:i:c:s1042443122001299
    DOI: 10.1016/j.intfin.2022.101657
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    More about this item

    Keywords

    Board tenure diversity; Investment efficiency; Director tenure;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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