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The role of caste for board membership, CEO, and interlocking

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  • Dayanandan, Ajit
  • Donker, Han
  • Nofsinger, John

Abstract

We examine the caste affiliation of corporate leadership in India. We find that the affirmative action policies targeted to the public sector have not filtered into the private sector. Indian boards are not very diverse—usually dominated by directors from a single caste. Boards dominated by one caste also tend to have a CEO from the same caste, putting into question how independent some directors may be. Over one third of the directors are interlocked by holding multiple directorships. However, this interlocking is done with firms dominated by the same caste. Therefore, Indian corporate leadership fails to obtain the benefits of having directors with weak social ties. The lack of caste diversity in boards, CEOs, and interlocks are all associated with lower firm value.

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  • Dayanandan, Ajit & Donker, Han & Nofsinger, John, 2019. "The role of caste for board membership, CEO, and interlocking," Pacific-Basin Finance Journal, Elsevier, vol. 54(C), pages 29-41.
    • Handle: RePEc:eee:pacfin:v:54:y:2019:i:c:p:29-41
    DOI: 10.1016/j.pacfin.2019.01.009
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    2. Ghosh, Saibal, 2022. "Religiosity and bank performance: How strong is the link?," Journal of Behavioral and Experimental Finance, Elsevier, vol. 33(C).
    3. Bibek Bhattacharya & Ipsu Khadka & Dalhia Mani, 2022. "Shaking Up (and Keeping Intact) the Old Boys’ Network: The Impact of the Mandatory Gender Quota on the Board of Directors in India," Journal of Business Ethics, Springer, vol. 177(4), pages 763-778, May.
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    More about this item

    Keywords

    Caste; Boards; CEO; Interlocks; Strength of weak ties; Firm value;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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