Publication Type
Working Paper
Version
publishedVersion
Publication Date
2-2016
Abstract
We examine the effects of diversity in the board of directors on corporate policies and risk. Using a multi-dimensional measure, we find that greater board diversity leads to lower volatility and better performance. The lower risk levels are largely due to diverse boards adopting more persistent and less risky financial policies. However, consistent with diversity fostering more efficient (real) risk-taking, firms with greater board diversity also invest persistently more in R&D and have more efficient innovation processes. Instrumental variable tests that exploit exogenous variation in firm access to the supply of diverse nonlocal directors indicate that these relations are causal.
Keywords
diversity, board of directors, risk, financial policies, innovation, performance
Discipline
Corporate Finance | Strategic Management Policy
Research Areas
Finance
First Page
1
Last Page
96
Identifier
10.2139/ssrn.2733394
Publisher
SSRN
Citation
BERNILE, Gennaro; BHAGWAT, Vineet; and YONKER, Scott.
Board diversity, firm risk, and corporate policies. (2016). 1-96.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5235
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2139/ssrn.2733394