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Does board diversity mitigate risk? The effect of homophily and social ties on risk-taking in financial institutions

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  • Alzayed, Noora
  • Batiz-Lazo, Bernardo
  • Eskandari, Rasol

Abstract

This study investigates whether greater board diversity and looser social network ties have an impact on board independence and risk-taking in US financial institutions from 2010 to 2022.The econometric strategy involved structural equation models, where risk as a dependent variable was measured by two latent variables and a total of five measures of risk. Several aspects of board diversity were utilized including gender, social, experience and educational backgrounds.

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  • Alzayed, Noora & Batiz-Lazo, Bernardo & Eskandari, Rasol, 2024. "Does board diversity mitigate risk? The effect of homophily and social ties on risk-taking in financial institutions," Research in International Business and Finance, Elsevier, vol. 70(PA).
    • Handle: RePEc:eee:riibaf:v:70:y:2024:i:pa:s0275531924000990
    DOI: 10.1016/j.ribaf.2024.102306
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