Showing papers on "Corporate group published in 2015"

International Diversification of Emerging Market Firms: The Role of Ownership Structure and Group Affiliation

Abstract: We examine the role of ownership structure on international diversification during institutional transition. We also examine how domestic and foreign ownership, as well as business group affiliation, moderate the performance consequences of international diversification. Our theoretical framework integrates agency and institutional perspectives with internationalization research. We argue that the ownership concentration, along with the identity of owners, will influence firm internationalization. Our results, based on a longitudinal sample of more than 5,000 publicly listed Indian firms during 1990–2005, demonstrate that greater domestic or foreign ownership is associated with a higher level of international diversification by emerging economy firms. Furthermore, a negative relationship emerges between international diversification and firm performance, moderated by the ownership concentration of domestic owners and group affiliation.

Are Related-Party Sales Value-Adding or Value-Destroying? Evidence from China

Abstract: Prior literature provides mixed and relatively little evidence on the economic consequences of related-party transactions. We examine a hitherto underexplored issue of whether transactions among firms within the same business group increase or reduce firm value. Using a large sample of Chinese listed firms, we find that related-party sales increase firm value. However, this value enhancement disappears for firms with (i) large percentage of parent directors, (ii) high government ownership, or (iii) tax avoidance incentives that often couple with management's rent extraction activities. Although we find that intragroup sales improve firm value in general, we also find that corporate insiders use intragroup sales to deprive value from minority shareholders. Overall, our findings highlight the interplay between ownership structure and tax avoidance incentives in determining the economic consequences of related-party transactions.

International Search Behavior of Business Group Affiliated Firms: Scope of Institutional Changes and Intragroup Heterogeneity

Abstract: This paper investigates whether and when affiliation to business groups enables or constrains firms' international search behavior during institutional transitions. We theorize that given the unique structure and complex form of business group organizations, the search behavior of affiliated firms is influenced by the degree of misalignment in outlook at the group and affiliate levels of management. We identify the scope of institutional changes, business group attributes, and affiliate characteristics as sources of such misalignment. The results from panel data on 298 firms from the Indian pharmaceutical industry for the 1992-2007 period show that the constraining effects of business group affiliation are observed only when institutional changes are specific to the affiliates' industry and not when broad institutional changes affect the business group as a whole. Moreover, we observe heterogeneity in the search behavior of group affiliated firms. First, the degree of misalignment is greater in the case of affiliates belonging to older business groups and those that are more distant in terms of age and industry since the group's founding. Second, by contrast and suggesting an alignment in outlook, we find that affiliated firms that occupy a prominent position within a group or industry are able to bargain for and receive attention and support from the business group to undertake international search. Our findings have implications for research on the role of business groups in a changing institutional context and for the strategic adaptation of firms embedded in complex organizational and institutional settings.

Auditor Choice and Its Implications for Group-Affiliated Firms

Abstract: We examine which of two opposing financial reporting incentives that group-affiliated firms experience shapes their accounting transparency evident in auditor choice. In one direction, complex group structure and intra-group transactions enable controlling shareholders to pursue diversionary activities that they later hide by distorting reported earnings. In the other direction, as outside investors price protect against potential expropriation, controlling shareholders may be eager to improve financial reporting quality in order to alleviate agency costs. To empirically clarify whether group affiliation affects company insiders’ incentives to address minority shareholders’ concerns over agency costs, we examine auditor selection of group firms relative to stand-alone firms. In comparison to non-group firms, our evidence implies that group firms are more likely to appoint Top 10 audit firms in China, especially when their controlling shareholders have stronger incentives to improve external monitoring of the financial reporting process. After isolating group firms, we find that the presence of a Top 10 auditor translates into higher earnings and disclosure quality, higher valuation implications for related-party transactions, and cheaper equity financing, implying that these firms benefit from engaging a high-quality auditor. In additional analysis consistent with our predictions, we find that group firms that are Top 10 clients pay higher audit fees and their controlling shareholders are more constrained against meeting earnings benchmarks through intra-group transactions and siphoning corporate resources at the expense of minority investors. Collectively, our evidence supports the narrative that insiders in firms belonging to business groups weigh the costs and benefits stemming from auditor choice.

How “Face” Matters: Chinese Corporate Tourists in Australia

Abstract: Corporate travel is a growing segment within the Chinese tourism market, yet despite the widespread belief that cultural values influence behavior, little research has examined the touring experiences of Mainland Chinese corporate travelers. This study, based on participant observations of 12 corporate group package tours, suggests that the “face” concept underlies the touring experiences of Chinese corporate travelers. The travelers emphasized the need to pay appropriate respect to one’s superiors, maintain relationships through gift-giving, and participate in social networking to establish and maintain positive relationships. Implications for tourism scholars and planners are provided.

Separation of Cash Flow and Voting Rights and Firm Performance in Large Family Business Groups in Korea

Abstract: Manuscript Type Empirical Research Question/Issue This study examines how separation of cash flow and voting rights influences performance of firms affiliated with large family business groups. Complementing the dominant view grounded in agency theory, we suggest that the separation of cash flow and voting rights has positive influence on firm performance in the context of large family business groups. Research Findings/Insights Using the data from the large family business groups in Korea, or Chaebols, between 2003 and 2010, we found that the separation is positively associated with firm accounting performance, but not with market performance. We also found that the effect of the separation is moderated by analyst coverage, R&D expenditure, and sales share in the business group. Theoretical/Academic Implications This study reveals that in the large family business groups, the context in which the separation most frequently occurs, the separation not only induces the controlling minority shareholders to pursue private benefits of control but also accompanies financing benefits from active use of the internal capital market. In addition, this study notes the importance of addressing the endogeneity in the analysis of the relation between ownership structure and performance. Practitioner/Policy Implications This study offers insights to policy makers planning to enforce/revoke the regulation on the separation of cash flow and voting rights in the pursuit of corporate governance reform especially in countries with poor shareholder protection.

Corporate Governance in Europe: A Critical Review of the European Commission's Initiatives on Corporate Law and Corporate Governance

Abstract: European corporate law and corporate governance are moving ahead beyond expectation. Some British voices called this “a renaissance in the past decade”. In December 2012, the European Commission came forward with an Action Plan that combines both corporate law and corporate governance rules and contains sixteen disparate initiatives partly to be implemented through Directives, partly through non-legal measures. Meanwhile a fight on the Draft Shareholder Rights Directive is going on in the European Council and the Parliament, with major compromises pending in 2015. Further corporate law harmonization measures are under way, in particular the proposal of Single-Member Private Limited Companies. The European Court of Justice’s case law has a far-reaching impact on the free movement of corporations in the European Union, but is not able to singlehandedly create European corporate law with decisions based on the freedoms of the Treaty. On this background the article analyzes seven critical areas of European Corporate Law and Governance as of 2015: Empowering shareholders and institutional investors; controlling shareholders, groups of companies and related party transactions; new European corporate forms; corporate and bank governance; free transfer of seat without new incorporation; corporate finance and capital maintenance and European takeover law reform. The article ends with looking into the goals, methods and scope of European corporate law-making. Free mobility and minimum protection have to be balanced. Transparency as a method of regulation strengthens private autonomy and supports market forces. Harmonization must be limited to the core areas of corporate law, and national and European corporate law will need to complement one another. It remains to be seen whether the codification plans of the Commission and the private model law initiatives will produce convincing results. In sum any step to more European law in the before-mentioned core areas should not only be left to the forces or deadlocks of political compromise, but in order to be really useful will need to be addressed in a careful, ongoing, policy-oriented, economic and comparative law discussion.

Corporate Social Responsibility, Private Law and Global Supply Chains

Abstract: Contents: 1. Corporate Social Responsibility and Private Law 2. Company Law, Corporate Governance and Corporate Social Responsibility 3. Contract Law, Global Supply Chains and Corporate Social Responsibility 4. Consumer Protection Law and Corporate Social Responsibility 5. Tort Law and Corporate Social Responsibility 6. The Promotion of Corporate Social Responsibility in English Private Law 7. The Rana Plaza Building Collapse - Corporate Social Responsibility, Private Index

A guide to Corporate Governance practices in the European Union

Abstract: As one of the most rapidly changing corporate governance environments in the world, Europe represents a microcosm of the exciting innovation happening in the corporate governance arena, ranging from new approaches to board-level corporate governance practices to changes in regulatory requirements at the legislative level. Representing a diverse mix of nations at various stages of economic development and market maturity, the European Union as an entity is demonstrating the broad value of a prioritized focus on corporate governance while accounting for individual country and company circumstances. This publication, a guide to Corporate Governance practices in the European Union, offers an overview of the changes taking place across the EU’s corporate governance landscape. It provides a focused examination of specific regulations and practices as well as a frank assessment of the challenges that remain. The value of this publication is that it examines the issues from all sides. It assesses the steps forward and steps backward, the progress made and the gaps that remain, presenting the sometimes widely varying perspectives of owners, boards, management, and other stakeholders to create a complete picture of the European corporate governance environment.

Decision Support System for the Agri-food Sector – The Sousacamp Group Case

Abstract: The agri-food organizations evolution, and its inherent need for well supported decision making, has led to an increase on the integration of IT/IS into their business and operational processes. With this in mind, an analysis was performed to the use of systems designed to support business decisions, thus allowing to acknowledge that there was none that answered to the needs inherent to organization from the mushroom production sector. This led to the definition and implementation of a DSS system, with the necessary features and qualities, which would help the mentioned activity sector needs. This DSS was designed and tested in a real environment through the implementation of a case study within a eatable mushrooms production company named “Sousacamp Group”. With the implementation of the proposed DSS, the referred business group has reported an increased in their performance levels and decision making accuracy.

The layered structure of company share networks

Abstract: We present a framework for the analysis of corporate governance problems using network science and graph algorithms on ownership networks. In such networks, nodes model companies/shareholders and edges model shares owned. Inspired by the widespread pyramidal organization of corporate groups of companies, we model ownership networks as layered graphs, and exploit the layered structure to design feasible and efficient solutions to three key problems of corporate governance. The first one is the long-standing problem of computing direct and indirect ownership (integrated ownership problem). The other two problems are introduced here: computing direct and indirect dividends (dividend problem), and computing the group of companies controlled by a parent shareholder (corporate group problem). We conduct an extensive empirical analysis of the Italian ownership network, which, with its 3.9M nodes, is 30× the largest network studied so far.

From Corporate Law to Corporate Governance

Abstract: This essay is a contribution to the forthcoming Oxford University Press Handbook of Corporate Law and Governance edited by Jeffery Gordon and Georg Ringe. In the 1960s and 1970s, corporate law and finance scholars recognized that neither discipline was doing a very good job of explaining how corporations were really structured and performed. For legal scholars, Yale Law School professor and then Stanford Law School dean Bayless Manning confessed that corporate law has “nothing left but our great empty corporation statutes – towering skyscrapers of rusted girders, internally welded together and containing nothing but wind.” Michael Jensen and William Meckling made a similar comment with respect to finance. The theory of the firm was an “empty box” or a “black box” that provided no theory about “how the conflicting objectives of the individual participants are brought into equilibrium.” The result of Jensen and Meckling’s seminal reframing of corporate law in agency cost terms, and so into something far broader than disputes over statutory language, was that both Manning’s empty skyscrapers and Jensen and Meckling’s empty box began to be filled.The essay proceeds by tracking how corporate law became corporate governance – from legal rules standing alone to legal rules interacting with non-legal processes and institutions – through three somewhat idiosyncratically chosen but nonetheless related examples of how we have come to usefully complicate the inquiry into the structures that bear on corporate decision-making and performance. Part I frames the first level of complication in moving from law to governance by defining governance broadly as the company’s operating system, a braided framework encompassing legal and non-legal elements. Part II then adds a second level of complication by treating corporate governance dynamically: corporate governance becomes a path dependent outcome of the tools available when a national governance system begins taking shape, and the process by which elements are added to the governance system going forward – driven by what Paul Milgrom and John Roberts call “supermodularity.” That characteristic reads importantly on both the difficulty of corporate governance, as opposed to corporate law, reform and the non-intuitive pattern of the results of reform: significant reform leads to things getting worse before they get better. Part II then further complicates corporate governance by expanding it beyond the boundaries of the corporation, treating particular governance regimes as complementary to other social structures – for example, the labor market, the capital market and the political structure – that together define different varieties of capitalism. Next, Part III considers commonplace, but I will suggest misguided, efforts to take a different tack from Parts I and II: to simplify rather than complicate corporate governance analysis by recourse to now familiar single factor analytic models: stakeholder theory, team production, director primacy, and shareholder primacy. Part III suggests that these reductions are neither models nor particularly helpful; they neither bridge the contextual specificity of most corporate governance analysis nor address the necessary interaction in allocating responsibilities among shareholders, teams and directors. As well, these “models” are static rather than dynamic, a serious failing in an era in which the second derivative of change is positive in many business environments and Schumpeter seems to be getting the better of Burke. Part IV concludes by examining the importance of a corporate governance system’s capacity to respond to changes in the business environment: the greater the rate of change, the more important is a governance system’s capacity to adapt and the less important its ability to support long-term firm-specific investment.

Determinants of technology adoption in the retail trade industry - the case of SMEs in Spain

Abstract: This paper analyzes the determinants of small and medium-sized enterprises’ technology adoption in the retail trade industry. From the theoretical perspective, two types of influential factors are differentiated in this respect: the personal characteristics of the manager/business owner and the business’s organizational characteristics. The empirical analysis is based on a survey of 268 small and medium-sized enterprises in the Spanish retail trade sector. A logistic regression specification is used as an econometric method. The results indicate that both the acquisition of new technical and electronic equipment and the obtaining of new software are affected by the two types of determinants previously pointed out. The manager/business owner’s entrepreneurial motivation and educational background have significant influences on technology adoption in this type of companies. Furthermore, being part of a business group, carrying out training activities for the employees and inter-firm cooperation also positively influence technology adoption in the retail trade industry.

Responsibilities of companies towards employees

Abstract: Central to company law is the promotion of corporate governance. An important question in company law still today is in whose interest the company should be managed. Corporate governance needs to address the entire span of responsibilities to stakeholders of the company such as customers, employees, shareholders, suppliers and the community at large. The promotion of human rights in the application of company law must also take place. This is extremely important given the significant role of enterprises within the social and economic life of the nation. The interests of various stakeholder groups in the context of the corporation as a "social institution" should be enhanced and protected. Because corporations are part of society and the community, like all of us, it is required of them to be socially responsible and have greater accountability to all stakeholders of the company. Although directors must act in the best interests of shareholders collectively they must also consider the interests of other stakeholders. Sustainable relationships with all the relevant stakeholders are thus important. The advancement of social justice is thus important to corporations in that they should take note of the Constitution, labour legislation and company law legislation when social justice issues are dealt with. Employees have become very important stakeholders of companies and their needs should be taken into account in the bigger corporate governance and social responsibility framework.

A Team Production Theory of Canadian Corporate Law

Abstract: The article applies the Team Production Theory developed by American corporate law scholars, Margaret Blair and Lynn Stout, to argue that Canadian corporate law's understanding of public corporations that are not controlled by a single shareholder or group of shareholders reflects a director primacy norm rather than a shareholder primacy norm. Canadian corporate law provides that directors of such public corporations with widely-held share ownership and voting rights are free from direct control by any corporate stakeholders. A potential departing point for Canadian corporate law. the oppression remedy, continues to develop to deal with extra-legal advantages rooted primarily in unequal power relations among corporate stakeholders. However, in its current and predicted future applications, the oppression remedy does not provide any given stakeholder group with an ability to dominate the boards of public corporations and obviate the director primacy norm. The article suggests that because the director primacy norm accurately describes Canadian corporate law, further consideration needs to be given to corporate law's relative relevance in dictating how Canadian corporations currently operate.

In Defense of Corporate Persons

Abstract: This essay is a critique of this attack on corporate personhood. It explains that the corporate separateness - corporate “personhood” - is an important legal principle as a matter of corporate law. What’s more, as a matter of constitutional law, corporate “personhood” deserves a more nuanced analysis than has been typically offered in arguing in favor of an amendment to overturn Citizens United. Indeed, the concept of corporate “personhood” can in fact be marshaled in arguments against corporations being able to assert constitutional rights. In the nascent category of cases brought by corporations asserting rights of religious freedom, for example, corporations typically derivatively assert the religious claims of their shareholders. Attention to corporate “personhood” would lead courts to separate the claims of shareholders from those of the corporation itself, leading to a dismissal of corporate religious claims asserted on behalf of shareholders. Finally, it proposes that the concerns motivating the movement against corporate personhood should be ameliorated with adjustments in corporate governance rather than constitutional law. In corporate law, what we need are changes in corporate governance to make corporations more like persons, not less. Unlike persons, corporations are expected to act if they have only one goal - the production of shareholder value. People must balance a range of obligations, both moral and legal. Requiring corporations to attend to a broader range of stakeholders would make corporations more like people, would make them better citizens, and would make their political participation less problematic.

An Analysis of Corporate Social Responsibility in the Turkish Business Context

Abstract: Depending on the increasing social and environmental problems, corporate social responsibility (CSR) has been promoted by both national and international bodies to achieve the principles of sustainable development at the organizational level Since the concept has provided a significant framework for the relations between business and society, this corporate response can be particularly crucial for the problems in the developing country context Therefore, it is important to understand how CSR is adopted and practiced by the organizations in such countries to improve the overall quality and quantity of CSR involvement The purpose of current study is to analyse the evolution of CSR conception in Turkey as a developing country Considering its unique position between East and West, Turkey provides a different political, economic, social, and cultural context for CSR conception than other European counties The concept has built on the philanthropic heritage of Ottoman period and then evolved in line with the dependency relationship between business and state during the Republican period Despite the increasing attention of organizations towards CSR during the last decade, it seems that the institutional environment continues to affect the nature and structure of CSR involvement in Turkey

How the Company Became an Entity: A New Understanding of Corporate Law

Abstract: This paper argues for an entity-based understanding of the modern company, recognising capital was severed from the holders of shares with the advent of limited liability. This division was instrumental in the development of the modern company and was implicitly recognised in Salomon. The modern company is an entity created by statute comprising a capital fund normatively controlled by the board of directors. Shareholders’ ownership rights are so attenuated in the modern company that shareholders are significant only because collectively, or individually with a block of shares, they can exercise indirect control. The focus when regulating companies should therefore be on control.

Conservative Collision Course?: The Tension between Conservative Corporate Law Theory and Citizens United

Abstract: One important aspect of Citizens United has been overlooked: the tension between the conservative majority’s view of for-profit corporations, and the theory of for-profit corporations embraced by conservative thinkers. This article explores the tension between these conservative schools of thought and shows that Citizens United may unwittingly strengthen the arguments of conservative corporate theory’s principal rival.Citizens United posits that stockholders of for-profit corporations can constrain corporate political spending and that corporations can legitimately engage in political spending. Conservative corporate theory is premised on the contrary assumptions that stockholders are poorly-positioned to monitor corporate managers for even their fidelity to a profit maximization principle, and that corporate managers have no legitimate ability to reconcile stockholders’ diverse political views. Because stockholders invest in for-profit corporations for financial gain, and not to express political or moral values, conservative corporate theory argues that corporate managers should focus solely on stockholder wealth maximization and non-stockholder constituencies and society should rely upon government regulation to protect against corporate overreaching. Conservative corporate theory’s recognition that corporations lack legitimacy in this area has been strengthened by market developments that Citizens United slighted: that most humans invest in the equity markets through mutual funds under section 401(k) plans, cannot exit these investments as a practical matter, and lack any rational ability to influence how corporations spend in the political process.Because Citizens United unleashes corporate wealth to influence who gets elected to regulate corporate conduct and because conservative corporate theory holds that such spending may only be motivated by a desire to increase corporate profits, the result is that corporations are likely to engage in political spending solely to elect or defeat candidates who favor industry-friendly regulatory policies, even though human investors have far broader concerns, including a desire to be protected from externalities generated by corporate profit-seeking. Citizens United thus undercuts conservative corporate theory’s reliance upon regulation as an answer to corporate externality risk, and strengthens the argument of its rival theory that corporate managers must consider the best interests of employees, consumers, communities, the environment, and society — and not just stockholders — when making business decisions.

A New Approach to Analysing the Growth Strategy of Business Groups in Developing Countries: The Case Study of India's Tata Group

Abstract: Earlier works on firms’ competitiveness show limitations by mainly focusing on input factors, or the “what” factors for growth. This paper first shows the current business environment in which there are decreasing gaps in the level of resources and technology along with other input factors and introduces a new perspective of strategy formulation to pay more attention to the process factors – the “how” approach to understanding the sources of competitive advantage of firms, particularly the business groups. This paper highlights that competitiveness is more about how a firm utilizes resources than about what resources it possesses. By emphasizing how firm competitiveness is built through time, this paper uses the ABCD model which fills the gap in the established literature of growth strategy and competitiveness. This paper analyses Tata Group of India as a case study and shows the applicability of ABCD model in explaining the growth of business groups in developing countries.

R&d collaboration for environmental innovation

Abstract: The literature on the impact of R&D collaboration on innovation performance of firms suggests that R&D collaboration is not always beneficial. Therefore, a more detailed analysis of the effects of R&D collaboration is necessary. This paper investigates the relevance of R&D collaboration with different partner types on a firm's environmental innovation performance. Thereby, product related and process related environmental innovations are distinguished. Firm-level data from 2337 German firms are used in the regression analysis. The results suggest that R&D collaboration with suppliers, customers, universities, governmental research institutes, consultants, and other firms within the same corporate group is positively associated to a firm's process related environmental innovation performance. R&D collaboration with customers, suppliers, other firms within the same corporate group and consultants is positively associated with the development of environmental friendly products.

Corporate social disclosure under isomorphic pressures: evidence from business groups

Abstract: This paper investigates the relationship between ownership and corporate social disclosure (CSD) with the aim of answering the following research questions: Can the affiliation of listed companies in a wider business group influence their CSD? Do the affiliated listed companies have CSDs similar to each other and/or to their parent company? If the businesses of affiliated listed subsidiaries are unrelated, how much of their CSD can be explained by the industry in which they operate instead of their group affiliation? The multiple case studies analysis developed through a content analysis applied to 13 business groups reveal whether and how the affiliation is influential on CSD. Findings show that the CSD of an entity is strongly affected by affiliation to a business group, both when subsidiaries operate in the same industry as their parent and when, notwithstanding the unrelated business, the directional activity of the parent is particularly significant.

A Behavioral Perspective on Corporate Law and Corporate Governance

Abstract: This chapter examines corporate law and governance from a behavioral perspective. It begins with an overview of the growing body of behavioral knowledge and its impact on the core assumptions of the agency theory. It then goes on to consider a number of specific areas of corporate law and governance where behavioral perspectives are particularly relevant, with particular emphasis on rule making. The chapter also explores how the board of directors performs, along with modern executive compensation systems, often in the form of performance-based pay. Finally, the chapter turns to the interaction between executives, non-executives, and (institutional) investors in corporate governance.

Corporate Governance: Mechanisms for Control and Alignment of Interests of Participants of Corporate Relations in the Transitive Economy

Abstract: The article presents findings of an empiric sociological survey of corporate governance at middle-sized industrial corporations in Russia. Evaluation of the effect of a market, federal law, internal corporate standards, and actions of corporate governance bodies on control and alignment of interests of participants of corporate governance has been given. Based on a content-analysis technique, which was applied to annual statements of middle-sized industrial corporations, formation of an insider model of corporate governance, approval of major owners at the corporate governance bodies, who are usually chairpersons of the Board of Directors and general managers of such companies, has been confirmed. A degree of focus on interaction with main stakeholder groups, such as consumers, customers, suppliers, personnel, partners and banks, and governmental authorities was discovered in the course of survey. According to the survey, the corporate law is the primary regulator of corporate relations, internal corporate standards and rules are hardly demanded, and non-formal relations with representatives of the governmental structures take an important place, and behaviour motivation is defined by rational profit motives. Activity of corporate governance bodies is formalized, ensuring solutions for matters of procedure. Evaluation of the corporate governance at middle-sized industrial corporations was obtained by way of a questionnaire survey. The level of agreement of interests of their parties was discovered. This article presents a detailed analysis of the matter of conflicts of participants of corporate relations, ways of overcoming such conflicts, based on defining priorities in fulfilling interests of participants of corporate governance. The respondents measure the level of corporate governance at middle-sized corporations as satisfactory and corresponding to interests of main participants of corporate relations. DOI: 10.5901/mjss.2015.v6n4s4p118

Female directors on German supervisory boards and firms’ financial performance

Abstract: This study examines the relationship between gender diversity on supervisory boards in a two-tier board structure with firms’ financial performance. The sample was taken out of the group of companies that are classified as “large corporations” by German law and therefore consists of solely German corporations. The relationship was explored, using financial accounting performance data for the years 2009 and 2013 (return on assets and return on equity), stock performance data and the average percentage of women directors in 108 German “large corporations” over the years 2012 and 2013. The analysis is controlled by several industry, financial, organizational variables and one diversity variable, namely the directors’ nationality. Furthermore a robustness check was conducted, using stock price performance as a financial indicator. The correlation and regression analyses did not show enough evidence to indicate a significant relationship between gender diversity and firms’ financial performance.