The Impact of Management Board Diversity on Corporate Performance. An Empirical Analysis for the German Two-Tier System

Download or read book The Impact of Management Board Diversity on Corporate Performance. An Empirical Analysis for the German Two-Tier System written by Marc Eulerich and published by . This book was released on 2017 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: For the last two decades, board diversity is increasingly considered as a significant mechanism of good corporate governance. Thus, the question arises whether a heterogeneously or rather a homogenously composed board contributes to the efficiency of a company's management and monitoring. Especially national and international regulators and standard setters consider board diversity to be associated with an increasing firm performance. Therefore, the economic impact of board diversity aspects needs to be investigated empirically. This study examines the relationship between diversity within management boards and corporate performance for the German two-tier system by presenting a comprehensive literature analysis as well as an empirical analysis based on 149 publicly listed German organizations for the financial years 2009, 2010 and 2011. Hence, management board diversity is characterized by attributes, such as gender, age, nationality and functionality. An analysis comparable to the one at hand including multiple dimensions for German companies has not been performed, yet. We mostly find negative effects of various board diversity characteristics on corporate performance, especially regarding age and national diversity. This may be due to the fact that great internationality on boards can decrease communication between board members and large age differences may alleviate decision-making processes.