Board diversity and firm performance : analysis of directors' demographic and cognitive differences

Board diversity represents both challenges and opportunities for corporate practises and research. Although several reasons suggesting that diversity should be considered a key parameter to the design of effective governance, board remains remarkably homogenous and quite stable in their make-up. At the same time, women and, broadly speaking, minorities (in terms of race, education, experience, personality and so on) have been continuing to become a larger proportion of the workforce, and organizations have started to experience relevant changes in pools of potential candidates as high-ranking officer positions such as directors. As a result, governors and legislators in many countries in the world have instituted gender quotas while, in other regions, it has been the weight of large institutional shareholders and corporate board rating systems seeking to pressure companies into adding diversity in the boardroom. Since the board of directors, due to its influence and legitimate centrality in corporations, is a good place to start with policies that aim to promote better female and minority representation in business, the theme of board diversity and its link with firm performance is extremely critical and relevant. The aim of this thesis is to explore and analyse the board diversity universe, first introducing and explaining the two main streams of our works: the board of director and the diversity concepts. In particular, we have focused respectively on the roles and functions of the board, and on the construct of diversity, both on its connotation and possible categorization. Through a systematic literature review, we have discussed and combined the resulting board diversity with several measures of performance, from company value and risk to firm profitability and social responsibility. Then, we have organized the relevant theoretical perspectives and structured all the empirical results, extended in literature, in a general framework capable to recap the principle predictions and significant findings. Finally, we have critically summarized what we have learned from the board diversity literature and what we believe it could be done to move the field forward.