Board Cultural Diversity and Firm Performance Under Competitive Pressures

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aut.relation.journalThe Financial Review
dc.contributor.authorDodd, Olga
dc.contributor.authorFrijns, Bart
dc.contributor.authorGong, Robin
dc.contributor.authorLiao, Shushu
dc.date.accessioned2023-08-28T01:48:13Z
dc.date.available2023-08-28T01:48:13Z
dc.date.issued2023-08-25
dc.description.abstractWe examine the impact of board cultural diversity, based on directors' ancestry, on firm performance conditional on product market competition. We argue that culturally diverse boards foster critical thinking and offer creative solutions that help firms thrive in competitive environments. We document that culturally diverse boards are associated with superior performance for firms operating in highly competitive industries. To address potential endogeneity issues, we use a quasi‐natural experiment of the U.S. import tariff cuts. The positive impact of board cultural diversity on firm performance in competitive markets manifests itself in firms that innovate more, require creative inputs, and face heightened predation risk due to their high interdependence with industry rivals, in line with culturally diverse boards effectively performing their advisory role. Lastly, we find no evidence that board cultural diversity is associated with enhanced monitoring as its benefits fade in the presence of powerful CEOs.
dc.identifier.citationThe Financial Review, ISSN: 0732-8516 (Print); 1540-6288 (Online), Wiley. doi: 10.1111/fire.12365
dc.identifier.doi10.1111/fire.12365
dc.identifier.issn0732-8516
dc.identifier.issn1540-6288
dc.identifier.urihttp://hdl.handle.net/10292/16612
dc.languageen
dc.publisherWiley
dc.relation.urihttps://onlinelibrary.wiley.com/doi/10.1111/fire.12365
dc.rights.accessrightsOpenAccess
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subject1502 Banking, Finance and Investment
dc.subject3502 Banking, finance and investment
dc.titleBoard Cultural Diversity and Firm Performance Under Competitive Pressures
dc.typeJournal Article
pubs.elements-id519502
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