Board Diversity and Firm Performance Across Europe

Abstract

This study explores the relationship between board diversity and firm performance for a sample of companies listed in Italy, France, Germany, Spain and United Kingdom. We consider different dimensions of diversity, both demographic (gender, age and nationality diversity) and cognitive or non-observable (diversity in directors’ experience and education). We focus on diversity of both the entire board and its executive members only. We don’t find a significant relationship between firms’ performance and board diversity. However, when considering executive directors alone, results show that firms where female and foreign directors are more represented have better performance than others. As for cognitive diversity, results indicate that performance increases when directors have a longer tenure.