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Board diversity and firm risk-taking in the tourism sector: Moderating effects of board independence, CEO duality, and free cash flows

Author

Listed:
  • Ozgur Ozdemir

    (University of Nevada Las Vegas, USA)

  • Ezgi Erkmen

    (Boğaziçi University, Turkey)

  • Fatemeh Binesh

    (University of Nevada Las Vegas, USA)

Abstract

This study examines the effect of board diversity on risk-taking for tourism firms and analyzes the moderating effect of board independence, CEO duality, and free cash flows in this proposed relationship. Using a composite index of board diversity and a sample of tourism firms from the US hotel, restaurant, and airline industries, we find that greater board diversity leads to lower risk-taking, measured in standard deviation of return on assets. Moreover, we report that the risk-reduction effect of board diversity is more profound when tourism firms have less board independence and less free cash flows for investments. When board diversity is decomposed into relation-oriented and task-oriented diversity attributes, we find that only the task-oriented diversity is influential in reducing firm risk-taking for tourism firms. Akin to main analysis, the board independence and free cash flows are significant moderators of the relationship between task-oriented diversity and firm risk-taking.

Suggested Citation

  • Ozgur Ozdemir & Ezgi Erkmen & Fatemeh Binesh, 2022. "Board diversity and firm risk-taking in the tourism sector: Moderating effects of board independence, CEO duality, and free cash flows," Tourism Economics, , vol. 28(7), pages 1782-1804, November.
  • Handle: RePEc:sae:toueco:v:28:y:2022:i:7:p:1782-1804
    DOI: 10.1177/13548166211014367
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