Board Diversity and Firm Performance: The Indonesian Evidence

Corporate Ownership and Control Journal, Vol. 8, 2011

38 Pages Posted: 19 Dec 2010  

Salim Darmadi

Indonesia Financial Services Authority (OJK)

Date Written: December 17, 2010

Abstract

This paper examines the associations between diversity of board members and financial performance of the firms listed on the Indonesia Stock Exchange (IDX). Three demographic characteristics of board members - gender, nationality, and age - are used as the proxies for diversity. Using a sample of 169 listed firms, this study finds that both accounting and market performance have significant negative associations with gender diversity. Nationality diversity is found to have no influence on firm performance. In contrast, the proportion of young members is positively related to market performance, providing evidence that young people in the boardrooms are associated with improved financial performance.

Keywords: Corporate Governance, Board Diversity, Financial Performance, Indonesia

JEL Classification: G30, G34, J15, J16

Suggested Citation

Darmadi, Salim, Board Diversity and Firm Performance: The Indonesian Evidence (December 17, 2010). Corporate Ownership and Control Journal, Vol. 8, 2011. Available at SSRN: https://ssrn.com/abstract=1727195

Salim Darmadi (Contact Author)

Indonesia Financial Services Authority (OJK) ( email )

Bidakara 1, Jalan Jend. Gatot Subroto Kav. 71-73
Jakarta, Jakarta 12870
Indonesia

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