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Board diversity and organizational valuation: unravelling the effects of ethnicity and gender

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  • Collins Ntim

Abstract

Organizational boards of directors are one of the most important subgroups within most modern organizations, performing critical advisory, monitoring and resource dependence roles. This paper investigates the crucial question of whether the stock market values ethnic and gender diversity within organizational boards. We find that board diversity is positively associated with market valuation. We distinctively demonstrate further that ethnic diversity is valued more highly by the stock market than gender diversity. By contrast, we do not find any evidence of a significant non-linear link between board diversity and market valuation. Our findings are robust across a number of econometric models that deal with different types of endogeneities and market valuation measures. Overall, our results are consistent with agency and resource dependence theoretical predictions. Copyright Springer Science+Business Media New York 2015

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  • Collins Ntim, 2015. "Board diversity and organizational valuation: unravelling the effects of ethnicity and gender," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 167-195, February.
    • Handle: RePEc:kap:jmgtgv:v:19:y:2015:i:1:p:167-195
    DOI: 10.1007/s10997-013-9283-4
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    More about this item

    Keywords

    Organizational governance; Organizational valuation; Board diversity; Ethnicity and gender; Endogeneity; G30; G32; G34; G38;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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