How board diversity affects firm performance in emerging markets: Evidence on channels in controlled firms

Corporate Governance: An International Review

Volumn 23, Issue 2, 2015, Pages 83-103

  Ararat, Melsa ^a,b   Aksu, Mine ^a   Tansel Cetin, Ayse ^c  

^a Corporate Governance Forum of Turkey ^*  (Turkey)

^b SABANCI UNIVERSITY   (Turkey)

^c YALOVA UNIVERSITY   (Turkey)

Author keywords

Board diversity; Board monitoring; Controlled firms; Corporate governance; Firm performance

Indexed keywords

EID: 84925326293     PISSN: 09648410     EISSN: 14678683     Source Type: Journal    
DOI: 10.1111/corg.12103     Document Type: Article

References (76)

1. Adams, R. B. & Ferreira, D. 2009. Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94: 291-309.
2. Adams, R. B., Hermalin, B. E., & Weisbach, M. S. 2009. The role of boards of directors in corporate governance: A conceptual framework and survey. Finance Working Paper No. 228/2009; Fisher College of Business Working Paper No. 2008-03-020.
3. Aksu, M. H. & Kosedag, A. 2006. Transparency and disclosure scores and their determinants in the Istanbul Stock Exchange. Corporate Governance: An International Review, 14: 275-294.
4. Anderson, R., Reeb, D., Upadhyay, A., & Zhao, W. 2011. The economics of director heterogeneity. Financial Management, 40: 5-38.
5. Ararat, M., Black, B., & Yurtoglu, B. B. 2014. Corporate governance, business groups, and market value: Time-series evidence from Turkey. Northwestern Law & Econ Research Paper No. 13-19; ECGI - Finance Working Paper. Available at SSRN: http://ssrn.com/abstract=2277768
6. Ararat, M., Orbay, H., & Yurtoglu, B. B. 2010. The effects of board independence in controlled firms: Evidence from Turkey. 3rd International Conference on Corporate Governance in Emerging Markets, Korea University Business School, Seoul, Korea. Available at SSRN: http://ssrn.com/abstract=1663403
7. Bae, K. H., Kang, J. K., & Kim, J. M. 2002. Tunneling or value added? Evidence from mergers by Korean business groups. Journal of Finance, 57: 2695-2740.
8. Baron, R. & Kenny, D. 1986. The moderator-mediator variable distinction in social psychological research. Journal of Personality and Social Psychology, 51: 1173-1182.
9. Bebchuk, L. & Hamdani, A. 2009. The elusive quest for global governance standards. University of Pennsylvania Law Review, 157: 1263-1317.
10. Bekiroglu, C., Erdil, O., & Alpkan, L. 2011. Variable perceived by managers as antecedents to environmental management: An empirical study in the Turkish construction sector. Journal of Global Strategic Management, 9: 157-175.
11. Bell, S. T., Villado, A. J., Lukasik, M. A., Belayu, L., & Briggs, A. L. 2011. Getting specific about demographic diversity variables and team performance relationship: A meta-analysis. Journal of Management, 37: 709-743.
12. Ben-Amar, W., Francoeur, C., Hafsi, T., & Labelle, R. 2013. What makes better boards? A closer look at diversity and ownership. British Journal of Management, 24: 85-101.
13. Black, B. S., De Carvalho, A. G., Khanna, V., Kim, W., & Yurtoglu, B. B. 2013. Methods for multicountry studies of corporate governance: Evidence from the BRIKT countries. Journal of Econometrics, 183: 230-240.
14. Black, B., Kim, W., Jang, H., & Park, K. S. 2012. How corporate governance affects firm value: Evidence on channels from Korea. ECGI, Finance Working Paper, No. 103/2005. Available at SSRN: http://ssrn.com/abstract=1365945
15. Blau, P. M. 1977. Inequality and heterogeneity. New York: Free Press.
16. Byrne, D. 1971. The attraction paradigm. New York: Academic Press.
17. Carter, D. A., D'Souza, F., Simkins, B. J., & Simpson, W. G.. 2010. The gender and ethnic diversity of US boards and board committees and firm financial performance. Corporate Governance: An International Review, 18: 396-414.
18. Carter, D. A., Simkins, B. J., & Simpson, W. G. 2003. Corporate governance, board diversity, and firm value. The Financial Review, 38: 33-53.
19. Chatman, J., Polzer, J., Barsade, S., & Neale, M. 1998. Being different yet feeling similar: The influence of demographic composition and organizational culture on work processes and outcomes. Administrative Sciences Quarterly, 43: 749-780.
20. Claessens, S., Djankov, S., Fan, J., & Lang, L. 2002. Disentangling the incentive and entrenchment effects of large shareholdings. The Journal of Finance, 57: 2741-2772
21. CMBT (Capital Markets Board of Turkey). 2014. Annual Report.
22. Dahya, J., Dimitrov, O., & McConell, J. 2008. Dominant shareholders, corporate boards, and corporate value: A cross-country analysis. Journal of Financial Economics, 87: 73-100.
23. Darmadi, S. 2011. Board diversity and firm performance: The Indonesian evidence. Corporate Ownership and Control Journal, 8: 450-467. Available at SSRN: http://ssrn.com/abstract=1727195
24. De Nicolò, G., Laeven, L., & Ueda, K. 2008. Corporate governance quality: Trends and real effects. Journal of Financial Intermediation, 17: 198-228.
25. Desender, K. A., Aguilera, R. V., Crespi-Cladera, R., & García-Cestona, M. A. 2013. When does ownership matter? Board characteristics and behavior. Strategic Management Journal, 34: 823-842.
26. Durnev, A. & Kim, E. H. 2005. To steal or not to steal: Firm attributes, legal environment, and valuation. The Journal of Finance, 60: 1461-1493.
27. Edwards, J. R. & Lambert, L. S. 2007. Methods for integrating moderation and mediation: A general analytical framework using moderated path analysis. Psychological Methods, 12: 1-22.
28. Engelen, P. J., van der Laan, G., & van den Berg, A. 2012. Board diversity as a shield during the financial crisis. In S. Boubaker, B. D. Nguyen, & D. K. Nguyen (Eds.), Corporate governance: Recent developments and new trends: 259-285. New York: Springer.
29. Erhardt, N. L., Werbel, J. D., & Shrader, C. B. 2003. Board of director diversity and firm financial performance. Corporate Governance: An International Review, 11: 102-111.
30. Faccio, M. & Lang, L. 2002. Corporate ownership structure and the informativeness of accounting earnings in East Asia. Journal of Accounting and Economics, 33: 401-425.
31. Fama, E. & Jensen, M. 1983. Agency problems and residual claims. Journal of Law & Economics, 26: 327-349.
32. Fan, J. P. H. & Wong, T. J. 2002. Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia. Journal of Accounting Research, 43: 35-72.
33. Forbes, D. P. & Milliken, F. J. 1999. Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Academy of Management Review, 24: 489-505.
34. Gilson, R. J. & Gordon, J. N. 2003. Controlling controlling shareholders. University of Pennsylvania Law Review, 152: 785-843.
35. Gosh, S. 2007. Leverage, managerial monitoring and firm valuation: A simultaneous equation approach. Research in Economics, 61: 84-98.
36. Gugler, K. P., Mueller, D. C., & Yurtoglu, B. B. 2008. Insider ownership, ownership concentration and investment performance: An international comparison. Journal of Corporate Finance, 14: 688-705.
37. Hafsi, T. & Turgut, G. 2011. Boardroom diversity and its effect on social performance: Conceptualization and empirical evidence. Journal of Business Ethics, 112: 463-479.
38. Harrison, D. A. & Klein, K. J. 2007. What's the difference? Diversity constructs as separation, variety, or disparity in organizations. Academy of Management Review, 32: 1199-1228.
39. Hermalin, B. E. & Weisbach M. S. 1998. Endogenously chosen boards of directors and their monitoring of the CEO. American Economic Review, 88: 96-118.
40. Hillman, A. J., Cannella, Jr. A. A., & Harris, I. C. 2002. Women and racial minorities in the boardroom: How do directors differ?. Journal of Management, 28: 747-763.
41. Hillman, A. J. & Dalziel, T. 2003. Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28: 383-396.
42. Hoi, C. & Robin, A. 2010. Agency conflicts, controlling owners proximity and firm value: An analysis of dual-class firms in the United States. Corporate Governance: An International Review, 18: 124-135.
43. Jensen, M. C. & Meckling W. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3: 305-360.
44. Johnson, S. G., Schnatterly, K., & Hill, A. D. 2013. Board composition beyond independence: Social capital, human capital and demographics. Journal of Management, 39: 232-262.
45. Joshi, A. A. & Roh, H. 2009. The role of context in work team diversity research: A meta-analytic review. Academy of Management Journal, 52: 599-627.
46. Kabasakal, H. & Dalmachian, A. 2001. Introduction to the special issue on leadership and culture in the Middle East. Applied Psychology: An International Review, 50: 479-489.
47. Kim, H. & Lim, C. 2010. Diversity, outsider directors' and firm valuation: Korean evidence. Journal of Business Research, 63: 284-291.
48. King, M. R. & Santor, E. 2008. Family values: Ownership structure, performance and capital structure of Canadian firms. Journal of Banking and Finance, 32: 2423-2432
49. Lambert, R. A., Leuz, C., & Verrecchia, R. E. 2007. Accounting information, disclosure, and the cost of capital. Journal of Accounting Research, 45: 385-420.
50. Lau, D. C. & Murnighan, J. K. 1998. Demographic diversity and fault lines: The compositional dynamics of organizational groups. Academy of Management Review, 23: 325-340.
51. Lee, S. C., Rhee, M., & Yoon, J. 2012. The effects of foreign monitoring on audit quality: Evidence from Korea. Available at SSRN: http://ssrn.com/abstract=2001782.
52. Mace, M. 1986. Directors: Myth and reality. Boston, MA: Harvard Business School Press.
53. Miller, T. & Triana, M. 2009. Demographic diversity in the boardroom: Mediators of the board diversity-firm performance relationship. Journal of Management Studies, 46: 755-786.
54. Minichilli, A., Gabrielsson, J., & Huse, M. 2007. Board evaluations: Making a fit between the purpose and the system. Corporate Governance: An International Review, 15: 609-622.
55. Morck, R. & Yeung, B. 2009. Never waste a good crisis: An historical perspective on comparative corporate governance. NBER Working Paper 15042.
56. Mount, M., Ilies, R., & Johnson, E. 2006. Relationship of personality traits and counterproductive work behaviors: The mediating effects of job satisfaction. Personnel Psychology, 59: 591-622.
57. Orbay, H. & Yurtoglu, B. B. 2006. The impact of corporate governance structures on the corporate investment performance in Turkey. Corporate Governance: An International Review, 14: 349-363.
58. Peasnell, K. V., Pope P. F., & Young S. 2005. Board monitoring and earnings management: Do outside directors influence abnormal accruals? Journal of Business Finance & Accounting, 32: 1311-1346.
59. Pelled, L., Eisenhardt, K., & Xin, K. 1999. Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44: 1-28.
60. Pfeffer, J. & Salancik, G. 1978. The external control of organizations: A resource dependence perspective. New York: Harper & Row.
61. Preacher, J. R. H., Rucker, D. D., & Hayes, A. F. 2007. Addressing moderated mediation hypotheses: Theory, methods, and prescriptions. Multivariate Behavioral Research, 42: 185-227.
62. Sharma, V. D. 2004. Board of director characteristics, institutional ownership, and fraud: Evidence from Australia. Auditing: A Journal of Practice and Theory, 23: 105-117.
63. Sharma, V., Naiker, V., & Lee, B. 2009. Determinants of audit committee meeting frequency: Evidence from a voluntary governance system. Accounting Horizons, 23: 245-263.
64. Shehata, N. F. 2013. How could board diversity influence corporate disclosure? Corporate Board: Role, Duties & Composition, 9: 42-49.
65. Shleifer, A. & Wolfenzon, D. 2002. Investor protection and equity markets. Journal of Financial Economics, 66: 3-27.
66. Snyder, M. & Gangestad, S. 1986. On the nature of self-monitoring: Matters of assessment, matters of validity. Journal of Personality and Social Psychology, 51: 125-139.
67. Tajfel, H. & Turner, J. C. 1979. An integrative theory of intergroup conflict. In W. G. Austin & S. Worchel (Eds.), The social psychology of intergroup relations: 33-47. Monterey, CA: Brooks/Cole.
68. Terjesen, S., Sealy, R., & Singh, V. 2009. Women directors on corporate boards: A review and research agenda. Corporate Governance: An International Review, 17: 320-337.
69. Van Knippenberg, D., De Dreui, C. K. W., & Homan, A. C. 2004. Work group diversity and group performance: An integrative model and research agenda. Journal of Applied Psychology, 89: 1008-1022.
70. Villalonga, B. & Amit, R. H. 2006. How do family ownership, control and management affect firm value? Journal of Financial Economics, 80: 385-417.
71. Williams, K. Y. & O'Reilly, C. A. 1998. Demography and diversity in organizations: A review of 40 years of research. Research in Organizational Behavior, 20: 77-140.
72. World Bank. 2014. Doing business around the world. Washington, DC: World Bank.
73. Yildirim-Oktem, O. & Usdiken, B. 2010. Contingencies versus external pressure: Professionalization in boards of firms affiliated to family business groups in late-industrializing countries. British Journal of Management, 21: 115-130.
74. Young, M. N., Peng, M.W., Ahlstrom, G., Bruton, D., & Jiang, Y. 2007. Corporate governance in emerging economies: A review of the principal-principal perspective. Journal of Management Studies, 45: 196-220.
75. Yurtoglu, B. B. 2003. Corporate governance and implications for minority shareholders in Turkey. Journal of Corporate Ownership & Control, 1: 72-86.
76. Zona, F., Zattoni, A., & Minichilli, A. 2013. A contingency model of boards of directors and firm innoovation: The moderating role of firm size. British Journal of Management, 24: 299-313.