Board Ancestral Diversity and Firm Performance Volatility

68 Pages Posted: 8 Dec 2015 Last revised: 17 Jul 2018

See all articles by Mariassunta Giannetti

Mariassunta Giannetti

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swedish House of Finance

Mengxin Zhao

Independent; Securities and Exchange Commission (SEC)

Multiple version iconThere are 2 versions of this paper

Date Written: May 11, 2018


We proxy for board members’ opinions and values using directors’ ancestral origins and show that diversity has costs and benefits, which lead to high performance volatility. Consistent with the idea that diverse groups experiment more, firms with ancestrally diverse boards have more numerous and more cited patents. In addition, their strategies conform less to those of the industry peers. However, firms with greater ancestral diversity also have more board meetings and make less predictable decisions. These findings suggest that diversity may lead to inefficiencies in the decision-making process and conflicts in the boardroom.

Keywords: Boards, Diversity, Culture, Genetics

JEL Classification: Z1, G3, O4

Suggested Citation

Giannetti, Mariassunta and Zhao, Mengxin and Zhao, Mengxin, Board Ancestral Diversity and Firm Performance Volatility (May 11, 2018). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 462/2016, Swedish House of Finance Research Paper No. 16-01, Journal of Financial and Quantitative Analysis (JFQA), Forthcoming, Available at SSRN: or

Mariassunta Giannetti (Contact Author)

Stockholm School of Economics ( email )

P.O. Box 6501
Sveavagen 65
SE-113 83 Stockholm
+46 8 736 9607 (Phone)
+46 8 312 327 (Fax)


Centre for Economic Policy Research (CEPR)

United Kingdom

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels


Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm

Mengxin Zhao


Securities and Exchange Commission (SEC) ( email )

450 Fifth Street, NW
Washington, DC 20549-1105
United States

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