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When two tribes go to work: Board political diversity and firm performance

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journal contribution
posted on 2020-04-23, 08:12 authored by James Rockey, Nadia Zakir

A substantial literature has studied how increased diversity in terms of gender, age, education, and race amongst members of firms’ boards affects decisions and performance. This paper studies whether ideological diversity in the boardroom affects firm performance. We find that whilst a board with a broader range of political opinions and beliefs is correlated with better performance ceteris paribus, that the causal impact of such an increase in diversity is negative and substantial. This negative effect is still present when diversity is measured excluding top management, and when diversity is defined in terms of the difference between firms’ management and non-executive directors. In conclusion we consider the implication of these findings given the recent growth in both political polarization and ideological segregation.

History

Citation

European Journal of Political Economy, in press, 101883

Author affiliation

School of Business

Version

  • AM (Accepted Manuscript)

Published in

European Journal of Political Economy

Pagination

101883 - 101883

Publisher

Elsevier

issn

0176-2680

Acceptance date

2020-03-30

Copyright date

2020

Publisher version

https://www.sciencedirect.com/science/article/pii/S0176268020300318#!

Language

en

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