Diversity in boardrooms and firm performance: The role of tenure and educational level of board members

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Barbara Sveva Magnanelli ORCID logo, Giulia Paolucci, Luca Pirolo ORCID logo


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Diversity on corporate boards has been studied from different perspectives in recent decades. The present study aims at investigating the impact on firm performance of two demographic diversity traits in boardrooms: tenure and educational diversity. The extant literature does not provide aligned findings on this topic, thus further research is still needed. The authors hypothesize that both tenure and educational diversity of board members have a positive effect on firm performance. To measure firm performance two dependent variables are used, applying two models for each hypothesis investigated Tobin’s Q and return on assets. The study is conducted using sample data of 187 listed firms within the European area, covering a 9-year period, from 2010 to 2018. Diversity dimensions are measured through indexes constructed on the basis of the mix among the directors in terms of educational level and tenure. The outcomes highlight a significant and positive relationship between tenure diversity on corporate boards and firm performance. In terms of the impact of educational diversity, no evidence indicating a positive effect on firm performance is found. The research carried out is unique because it considers two personal attributes of diversity calculating diversity indexes and measuring their impact on the firm’s performance. The econometric approach used has not been extensively applied in previous research. In fact, the majority of previous empirical studies have measured diversity through percentages or dummy variables, depending on the type of diversity aspect being analyzed, and then used it as the independent variable.

Keywords: Board Diversity, Corporate Governance, Tenure Diversity, Educational Diversity, Firm Performance

Authors’ individual contributions: Conceptualization — B.S.M., G.P., and L.P.; Methodology — B.S.M., G.P., and L.P.; Formal Analysis — B.S.M., G.P., and L.P.; Writing — B.S.M., G.P., and L.P.; Investigation — B.S.M., G.P., and L.P.; Project Administration — B.M.; Visualization — G.P.; Supervision — L.P.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M14, M12, M4

Received: 13.09.2021
Accepted: 12.11.2021
Published online: 17.11.2021

How to cite this paper: Magnanelli, B. S., Paolucci, G., & Pirolo, L. (2021). Diversity in boardrooms and firm performance: The role of tenure and educational level of board members. Corporate Board: Role, Duties and Composition, 17(3), 31–41. https://doi.org/10.22495/cbv17i3art3