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dc.contributor.authorAggarwal, Raj
dc.contributor.authorJindal, Varun
dc.contributor.authorSeth, Rama
dc.descriptionAggarwal, Raj, Foundation Board, Kent State University, Kent, OH, United States; Jindal, Varun, Finance and Control Group, Indian Institute of Management Calcutta, Kolkata, India; Seth, Rama, Finance and Control Group, Indian Institute of Management Calcutta, Kolkata, India, Department of Finance, Copenhagen Business School, Copenhagen, Denmark
dc.descriptionISSN/ISBN - 9695931
dc.descriptionDOI - 10.1016/j.ibusrev.2019.101600
dc.description.abstractThere is little consensus globally on the relationship between board diversity and firm performance. Using the resource dependence and agency views, this paper examines how business group affiliation influences the relationship between board diversity and firm performance as a contextual/confounding factor. Based on data for listed firms in India, we find that board demographic diversity is positively associated with the firm performance (Tobin's Q) of standalone firms, but this association is negative for group-affiliated firms. This negative effect of group affiliation is confirmed in a test based on a novel measure of firm performance using the stock market reaction to the announcement of mergers and acquisitions. For both measures of performance, we show that business group affiliation impairs the positive firm value effects of board demographic diversity. These findings imply that the relationship between board diversity and firm performance requires re-examination in the many countries where group affiliation is common. Our results also provide evidence of a new cost of group affiliation and show in a fresh context that cross-country studies should account for international variations in ownership and institutional structures.
dc.publisherInternational Business Review
dc.publisherElsevier Ltd
dc.subjectBoard diversity
dc.subjectBusiness groups
dc.subjectCorporate governance
dc.subjectInstitutional structure
dc.subjectMergers and acquisitions (M&A)
dc.titleBoard diversity and firm performance: The role of business group affiliation
Appears in Collections:Finance and Control

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