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Board Capital Diversity and Firm Value: Evidence from Latin-America

Author

Listed:
  • Cristian Pinto-Gutiérrez
  • Carlos Pombo
  • Jairo Villamil-Díaz

Abstract

This paper analyzes the effects of diversity of boards of directors’ human and relational capital on the performance of firms in Latin America. Using a large database of 442 firms in 6 countries (Argentina, Brazil, Chile, Colombia, Mexico, and Peru) from 2001 to 2012, we construct a Board Capital Diversity Index that includes educational backgrounds and work experiences for each board member. We find a positive relationship between board capital diversity and firm performance, as measured by Tobin’s Q. In particular, we find that both human capital diversity (educational background) and relational capital diversity (experience in the private and public sector) increase the value of the company. Our results confirm the resource dependence theory, where the board, in addition to its monitoring role, is seen as a provider of resources.

Suggested Citation

  • Cristian Pinto-Gutiérrez & Carlos Pombo & Jairo Villamil-Díaz, 2018. "Board Capital Diversity and Firm Value: Evidence from Latin-America," Documentos CEDE 16972, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:016972
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    File URL: https://repositorio.uniandes.edu.co/bitstream/handle/1992/41060/dcede2018-61.pdf
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    References listed on IDEAS

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    Cited by:

    1. Shoukat Ali & Ramiz ur Rehman & Wang Yuan & Muhammad Ishfaq Ahmad & Rizwan Ali, 2022. "Does foreign institutional ownership mediate the nexus between board diversity and the risk of financial distress? A case of an emerging economy of China," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(3), pages 553-581, September.

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    More about this item

    Keywords

    Corporate Governance; Director Heterogeneity; Firm Performance; Emerging Markets.;
    All these keywords.

    JEL classification:

    • 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

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