The effect of the board diversity on firm performance: An empirical study on the UK

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Abstract

This study aims at filling existing research by examining the effect of board composition specially board diversity on firm performance using cross-sectional data from London Stock Exchange (FTSE 350) of non-financial companies with a total observations 3961 companies for the years 2000–2016. To the best of our knowledge, the contribution of this paper is to examine the effect of board diversity (age, gender, education, and nationality) of FTSE 100 and FTSE 250 on firm performance. Our results indicate that age diversity has a negative effect on firm performance, which means that young board members enhance and increase firm performance. Furthermore, education diversity has a negative effect on firm performance. On the other hand, gender diversity has positive effect on firm performance, so if companies increase the number of females in the board of directors, firm performance will increase. Ultimately, our result reveals that nationality diversity has a positive effect on firm performance.

Keywords: Board Diversity, Firm Performance, Board Age, Board Education, Female on Board, Board Nationality

Authors’ individual contribution: Conceptualization — E.K.A.M.; Methodology — R.E., A.F.E., and M.A.K.B.; Software — A.F.E. and M.A.K.B.; Validation — R.E., A.F.E., M.A.K.B., and E.K.A.M.; Data Curation — R.E.; Writing — Original Draft — R.E., A.F.E., and M.A.K.B.; Writing — Review & Editing - E.K.A.M.

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

JEL Classification: M41, L22, M10

Received: 19.03.2021
Accepted: 24.05.2021
Published online: 25.05.2021

How to cite this paper: EmadEldeen, R., Elbayoumi, A. F., Basuony, M. A. K., & Mohamed, E. K. A. (2021). The effect of the board diversity on firm performance: An empirical study on the UK [Special issue]. Corporate Ownership & Control, 18(3), 337–347. https://doi.org/10.22495/cocv18i3siart8