Corporate Governance, Board Diversity, and Firm Value

Posted: 20 May 2003

See all articles by David Carter

David Carter

Oklahoma State University - Stillwater - Department of Finance

Betty J. Simkins

Oklahoma State University - Stillwater - Department of Finance

W. Gary Simpson

Oklahoma State University - Stillwater - Department of Finance

Abstract

This study examines the relationship between board diversity and firm value for Fortune 1000 firms. Board diversity is defined as the percentage of women, African-Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence examining whether board diversity is associated with improved financial value. After controlling for size, industry, and other corporate governance measures, we find significant positive relationships between the fraction of women or minorities on the board and firm value. We also find that the proportion of women and minorities on boards increases with firm size and board size but decreases as the number of insiders increases.

Suggested Citation

Carter, David A. and Simkins, Betty J. and Simpson, W. Gary, Corporate Governance, Board Diversity, and Firm Value. The Financial Review, February 2003. Available at SSRN: https://ssrn.com/abstract=344042

David A. Carter

Oklahoma State University - Stillwater - Department of Finance ( email )

Spears School of Business
Stillwater, OK 74078-4011
United States
405-744-5104 (Phone)
405-744-5180 (Fax)

Betty J. Simkins (Contact Author)

Oklahoma State University - Stillwater - Department of Finance ( email )

336 Business Building
Stillwater, OK 74078-4011
United States
405-744-8625 (Phone)
405-744-5180 (Fax)

HOME PAGE: http://spears.okstate.edu/~simkins

W. Gary Simpson

Oklahoma State University - Stillwater - Department of Finance ( email )

Spears School of Business
Stillwater, OK 74078-4011
United States

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