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Impact of boardroom diversity on corporate financial performance

Author

Listed:
  • Tanveer Bagh

    (Central University of Finance and Economics)

  • Muhammad Asif Khan

    (University of Kotli)

  • Natanya Meyer

    (College of Business and Economics)

  • Hammad Riaz

    (University of Poonch Rawalakot)

Abstract

This study investigates the impact of boardroom diversity (BD) on firms’ financial performance (FP), drawing on economic and resource dependency theory. The study further explores the influence of strategic change (SC) on this nexus, using a six-dimensional index to measurse BD and SC. A dataset of 240 non-financial firms listed on four stock exchanges (Moscow, Shanghai, Bombay, and Pakistan) over a 13-year period (2008–2020) is analyzed employing the generalized method of moments to address the common endogeneity problem in econometrics specification. The empirical results indicate that BD has a positive impact on FP, however, the impact is weakened by SC. The robustness of the findings is confirmed through alternative estimators. The study provides useful policy implications for managers and practitioners, suggesting that increasing BD can lead to improved FP, but careful consideration must be given to how SC may influence this connection.

Suggested Citation

  • Tanveer Bagh & Muhammad Asif Khan & Natanya Meyer & Hammad Riaz, 2023. "Impact of boardroom diversity on corporate financial performance," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.
    • Handle: RePEc:pal:palcom:v:10:y:2023:i:1:d:10.1057_s41599-023-01700-3
    DOI: 10.1057/s41599-023-01700-3
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