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The Impact of Board Diversity on Corporate Performance: New Evidence from Southeast Europe

In: Corporate Governance in the US and Global Settings

Author

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  • Filip Fidanoski
  • Kiril Simeonovski
  • Vesna Mateska

Abstract

Many organizations around the world currently are facing board diversity issues and challenges. Hence, this empirical paper investigates the relationship between board diversity and firm’s financial performance. We use a sample of 35 companies from five countries in Southeast Europe (Macedonia, Croatia, Serbia, Bosnia and Herzegovina, and Greece) for the period between 2008 and 2012 to find that, on average, companies with well-educated board members are more profitable and overvalued on the market. When running the regression again to test the levels of heterogeneity, we also find that the companies with more women on board tend to be overvalued on the market, while those with more foreigners on board are subject of undervaluation. The paper mostly contributes to the literature on corporate governance and board diversity. First, we postulate the impact of each of the board diversity variables on the financial performance and then show the extent of this impact and its economic interpretation. Our findings have important practitioners’ implications for corporate regulators and policy-makers since the demonstrated positive impact of the well-educated board members on firm’s financial performance gives a new impetus in building a corporate strategy that will intend to engage more people holding PhD on board.

Suggested Citation

  • Filip Fidanoski & Kiril Simeonovski & Vesna Mateska, 2014. "The Impact of Board Diversity on Corporate Performance: New Evidence from Southeast Europe," Advances in Financial Economics, in: Corporate Governance in the US and Global Settings, volume 17, pages 81-123, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-373220140000017003
    DOI: 10.1108/S1569-373220140000017003
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    Citations

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    Cited by:

    1. Salehudin Eka Saputra Alrasidi, ST, 2018. "Gender-Diversity, Financial Performance and Cash Holding in Family Firms," GATR Journals afr165, Global Academy of Training and Research (GATR) Enterprise.
    2. Eugenio Zubeltzu-Jaka & Eduardo Ortas & Igor Álvarez-Etxeberria, 2019. "Independent Directors and Organizational Performance: New Evidence from A Meta-Analytic Regression Analysis," Sustainability, MDPI, vol. 11(24), pages 1-25, December.
    3. Firas Farhan Jedi & Sabri Nayan, 2018. "An empirical evidence on the effect of women board representation on firm performance of companies listed in Iraq Stock Exchange," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(1), pages 117-131, January.
    4. Nazliben, Kamil Korhan & Renneboog, Luc & Uduwalage, Emil, 2022. "Social Diversity on Corporate Boards in a Country Torn by Civil War," Discussion Paper 2022-001, Tilburg University, Center for Economic Research.
    5. Yustinus Budi Hermanto & Lusy Lusy & Maria Widyastuti, 2021. "How Financial Performance and State-Owned Enterprise (SOE) Values Are Affected by Good Corporate Governance and Intellectual Capital Perspectives," Economies, MDPI, vol. 9(4), pages 1-13, September.
    6. Nazliben, Kamil Korhan & Renneboog, Luc & Uduwalage, Emil, 2022. "Social Diversity on Corporate Boards in a Country Torn by Civil War," Other publications TiSEM b4180c31-8e9a-4009-8b50-1, Tilburg University, School of Economics and Management.

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