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Social Diversity on Corporate Boards in a Country Torn by Civil War

Author

Listed:
  • Kamil K. Nazliben

    (Tilburg University)

  • Luc Renneboog

    (Tilburg University)

  • Emil Uduwalage

    (Wayamba University of Sri Lanka)

Abstract

We examine how social diversity and inclusiveness on corporate boards affect corporate performance and monitoring in Sri Lanka, a country subject to decades of polarization, civil war, and even genocide. Barely more than a decade after the civil war, we find that board social diversity on the basis of ethnicity, religion, language, gender, and nationality of the board members is positively related to corporate performance, both in terms of stock market performance and accounting returns, and to corporate financial stability. The main positive effects of social diversity derive from ethno-linguistic inclusiveness. The results are confirmed by an instrumental variable approach that addresses endogeneity issues. We find no evidence that inter-personal and moral conflicts or communication problems among board members negatively affect firm performance.

Suggested Citation

  • Kamil K. Nazliben & Luc Renneboog & Emil Uduwalage, 2024. "Social Diversity on Corporate Boards in a Country Torn by Civil War," Journal of Business Ethics, Springer, vol. 194(3), pages 679-706, October.
    • Handle: RePEc:kap:jbuset:v:194:y:2024:i:3:d:10.1007_s10551-024-05624-z
    DOI: 10.1007/s10551-024-05624-z
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    More about this item

    Keywords

    Socio-cultural diversity; Inclusiveness; Inclusion; Ethnic diversity; Gender bias; Corporate performance; CEO turnover; Corporate governance; Board of directors;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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