2018/09/14 by Mariassunta Giannetti, Mengxin Zhao · 2 citations
Business, Management and Accounting · Social Sciences · #Corporate Finance and Governance #Family Business Performance and Succession #Culture, Economy, and Development Studies
paper · doi:10.1017/s0022109018001035
We proxy for board members’ opinions and values using directors’ ancestral origins and show that diversity has costs and benefits, leading to high performance volatility. Consistent with the idea that diverse groups experiment more, firms with ancestrally diverse boards have more numerous and more cited patents. In addition, their strategies conform less to those of the industry peers. However, firms with greater ancestral diversity also have more board meetings and make less predictable decisions. These findings suggest that diversity may lead to inefficiencies in the decision-making process and conflicts in the boardroom.