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Diversity of the Board of Directors and Financial Performance of the Firms

Author

Listed:
  • Felipe Arenas-Torres

    (Centro de Investigación y Estudios Contables, Faculty of Business and Economics, Universidad de Talca, Talca 3460000, Chile)

  • Miguel Bustamante-Ubilla

    (Faculty of Business and Economics, Universidad de Talca, Talca 3460000, Chile
    Posgraduate System, Universidad Católica de Santiago de Guayaquil (UCSG), Guayaquil 090150, Ecuador)

  • Roberto Campos-Troncoso

    (Centro de Investigación y Estudios Contables, Faculty of Business and Economics, Universidad de Talca, Talca 3460000, Chile)

Abstract

The diversity of the board of directors continues to be a matter of concern for investors, regulators, and the general public. In this sense, the purpose of the research presented was to identify whether there is a positive and significant impact between the diverse variables of the board of directors and the financial performance of the firms. In this context, the study’s objective was to determine if the diversity in the composition of the boards of directors has a positive and significant impact on the financial performance of the companies listed in the Chilean stock market. The study considered a sample of 1106 reports on social responsibility and sustainable development between the 2015–2020 period and their respective returns. The research was descriptive-correlational, which determined the incidence of gender, nationality, and age diversity in the financial performance of the firms. The results show, in general, a low degree of gender and nationality diversity in Chilean boards. However, a positive and significant impact is observed in the commercial sector, nationality diversity, and the construction and gender diversity axis. In this regard, the study allows confirming the heterogeneity of results by linking the variables of diversity and financial performance and the importance of conducting sufficiently disaggregated studies to understand the relationship between both types of variables. Finally, this study updates the diversity levels of the board of directors for the Chilean stock market and establishes challenges for the regulator in terms of gender quotas and good corporate governance practices.

Suggested Citation

  • Felipe Arenas-Torres & Miguel Bustamante-Ubilla & Roberto Campos-Troncoso, 2021. "Diversity of the Board of Directors and Financial Performance of the Firms," Sustainability, MDPI, vol. 13(21), pages 1-11, October.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:21:p:11687-:d:662464
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    References listed on IDEAS

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    Cited by:

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    2. Chengpeng Zhu & Muhammad Husnain & Saif Ullah & Muhammad Tasnim Khan & Waris Ali, 2022. "Gender Diversity and Firms’ Sustainable Performance: Moderating Role of CEO Duality in Emerging Equity Market," Sustainability, MDPI, vol. 14(12), pages 1-26, June.
    3. Marwan Mansour & Hamzeh Al Amosh & Ahmad Yuosef Alodat & Saleh F. A. Khatib & Mohammed W. A. Saleh, 2022. "The Relationship between Corporate Governance Quality and Firm Performance: The Moderating Role of Capital Structure," Sustainability, MDPI, vol. 14(17), pages 1-25, August.

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