Board diversity, corporate governance, corporate performance, and executive pay
TLDR
In this paper, the impact of board diversity on corporate performance and executive pay within the context of MENA countries was investigated, and it was found that board diversity, as measured by director gender and nationality, has a positive effect on corporate financial performance.Abstract:
Departing from previous studies, this paper investigates the impact of corporate board diversity on corporate performance and executive pay within the context of MENA countries. Our sample includes a balanced panel of 600 firm-year observations, consisting of 100 individual firms drawn from 5 Middle Eastern countries (Egypt, Jordan, Oman, Saudi Arabia and United Arab of Emirates) over the 2009–2014 period. The findings are three-fold. First, board diversity, as measured by director gender and nationality, has a positive effect on corporate financial performance. Second, the relationship between board diversity and corporate performance is stronger in better-governed firms than their poorly-governed counterparts. Finally, board diversity, as measured by director gender, ethnicity and nationality, enhances the pay-for-performance sensitivity, but not the actual executive pay. Our results suggest that decisions about board diversity are not merely influenced by moral values; they arise because of the cost-benefit considerations of what diversity can bring to the firm. The findings are robust to controlling for different alternatives of board diversity measures, corporate governance proxies, corporate outcomes and types of endogeneities.read more
Citations
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Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda
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Executive Compensation, Sustainable Compensation Policy, Carbon Performance and Market Value
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CEO power and stock price crash risk in China: Do female directors' critical mass and ownership structure matter?
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Impact of board diversity and audit on firm performance
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Board gender diversity, environmental innovation and corporate carbon emissions
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