Board Ancestral Diversity and Firm Performance Volatility

Board Ancestral Diversity and Firm Performance Volatility

Mariassunta Giannetti, Mengxin Zhao

Series number :

Serial Number: 

Date posted :

December 08 2015

Last revised :

November 09 2017
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  • board • 
  • diversity • 
  • culture • 
  • Genetics

We proxy for board members’ differences of 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 diverse boards have more and more cited patents and their strategies conform less to those of the industry peers.

However, firms with greater ancestral diversity also have more board meetings, higher director turnover unrelated to performance, and make less predictable decisions. These findings suggest that diversity may lead to inefficiencies in the decision-making process and conflicts in the boardroom. Our results do not appear to be driven by firms’ risk-taking or complexity.


Real name:
Mengxin Zhao
Alberta School of Business, University of Alberta