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BOARD DIVERSITY AND FIRM PERFORMANCE: THE INDONESIAN EVIDENCE

Salim Darmadi

DOI: 10.22495/cocv8i2c4p4

Abstract

This paper examines the associations between diversity of board members and financial performance of the firms listed on the Indonesia Stock Exchange (IDX). Three demographic characteristics of board members—gender, nationality, and age—are used as the proxies for diversity. Using a sample of 169 listed firms, this study finds that both accounting and market performance have significant negative associations with gender diversity. Nationality diversity is found to have no influence on firm performance. In contrast, the proportion of young members is positively related to market performance, providing evidence that young people in the boardrooms are associated with improved financial performance.

Keywords: Corporate Governance, Board Diversity, Financial Performance, Indonesia

How to cite this paper: Darmadi, S. (2011). Board diversity and firm performance: The Indonesian evidence. Corporate Ownership & Control, 8(2-4), 450-466. http://dx.doi.org/10.22495/cocv8i2c4p4

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