Abstract:

Many governments seek to impose diversity in the boardroom, but the consequences of doing so are inconsistent and could decrease firm performance and economies. This paper shed light on this diversity at board level topic by conceptualizing the relationships as firm value and diverse board. Reasonable theoretical arguments drawn from Upper-echelon theory and agency theory suggest that board characteristics (gender, ethnic and age diversity) may have either a positive, negative, or neutral effect on the firm value. To investigate this phenomenon relevant hypotheses are developed to test diversity at board level and its impact on firm value with the use of appropriate variables and measures. For this empirical work, board of directors attributes and financial data used over the period 2009 to 2013. A total sample of large 60 top listed companies are selected on basis of their market capitalization. This study incorporates econometrics methodology on panel data analysis, which is used rigorously for hypothesis testing. Age profile of directors has positive significant impact on firm value. However, gender and ethnic diversity has no significant impact on firm value. The results indicate that demographic diversity at board level does have a relationship with market value.