Do investors value board ethnic diversity? A Canadian study

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Abstract

The purpose of this study is to examine whether investors take the ethnic diversity of boards of directors into account. Based on a sample of 563 Canadian firms listed on the Toronto Stock Exchange (TSX) for fiscal years 2019 to 2021 inclusively, our results suggest that investors positively perceive the nomination of a greater number of visible minority board members. However, the study findings also show that the impact of ethnicity on investors’ perception is nearly 50 percent less than the impact of gender diversity. The study conducted in the Canadian context corroborates the results observed in some previous work by confirming the positive impact that gender and ethnic diversity can have on business performance.

Keywords: Corporate Governance, Ethnic Diversity, Board of Directors, Value Relevance, Firm Market Value

Authors’ individual contributions: Conceptualization — C.B.; Methodology — M.C.; Formal Analysis — C.T. and M.C.; Writing — Original Draft — C.T.; Writing — Review & Editing — C.T., M.C., and S.B.; Supervision — C.T., M.C., and S.B.

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

JEL Classification: M4, M14, M12

Received: 10.03.2023
Accepted: 15.06.2023
Published online: 16.06.2023

How to cite this paper: Talbot, C., Coulmont, M., & Berthelot, S. (2023). Do investors value board ethnic diversity? A Canadian study. Corporate Board: Role, Duties and Composition, 19(1), 20–28. https://doi.org/10.22495/cbv19i1art2