Board composition and corporate governance performance: investigating the effects of diversity

This study investigated the diversity of the BOD and explored its impact on corporate governance through quantitative empirical analysis. This study uniquely adopted Taiwan Stock Exchange Corporate Governance 100 Index (TWSE CG 100 Index) as the measurement of corporate governance performance. Five highly related indicators, i.e. gender, independence, education, legal, finance or accounting profession, and seniority to measure board diversity, which could be efficient variables on predicting the firms’ likelihood being listed in the TWSE CG 100 Index, were used as independent variables. The results showed that board independence and the seniority of directors have a positive impact on corporate governance. This study made several important contributions. First, this study shed light on the conflicting evidence on the relationship between board diversity and firm corporate governance performance for the Taiwan economy. Second, this paper uniquely adopted TWSE CG 100 Index, and the findings can contribute to giving investors predictions about the quality of corporate governance and can serve as an incentive for corporates to enhance superior corporate governance. Furthermore, this study can contribute to practice by providing optimization suggestions for BOD composition and nomination. At last, this paper demonstrated policy justifications and implications for Taiwan government.