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Corporate Governance, Board Diversity, and Firm Value

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  • David A. Carter
  • Betty J. Simkins
  • W. Gary Simpson

Abstract

This study examines the relationship between board diversity and firm value for "Fortune" 1000 firms. Board diversity is defined as the percentage of women, African Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence examining whether board diversity is associated with improved financial value. After controlling for size, industry, and other corporate governance measures, we find significant positive relationships between the fraction of women or minorities on the board and firm value. We also find that the proportion of women and minorities on boards increases with firm size and board size, but decreases as the number of insiders increases. Copyright 2003 Eastern Finance Association.

Suggested Citation

  • David A. Carter & Betty J. Simkins & W. Gary Simpson, 2003. "Corporate Governance, Board Diversity, and Firm Value," The Financial Review, Eastern Finance Association, vol. 38(1), pages 33-53, February.
  • Handle: RePEc:bla:finrev:v:38:y:2003:i:1:p:33-53
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