This study aims to shed light into the impact of board characteristics (i.e., gender and
ethnic diversity, independence, board size and CEO duality) on firm performance
(capture by Tobin’s Q and ROA). Using empirical data from 2,507 corporations located
in 22 European Union countries and for the period spanning from 2000 to 2017, we
demonstrate interesting associations. Although we evidence a positive effect of female
directors on firm financial and market performances, the average share of female in the
boards of directors remains low, as it is only 11%. Also our findings indicate that there is
no significant relation between board diversity and CEO duality on firm performance.
Additionally, we evidence that ethnic diversity is more widespread as compared to gender
diversity on the boardroom, since 19% of directors have a different ethnic background
than the country of corporate headquarters. The effectiveness on the firm performance
although was not significant and appeared to have a negative prospect as concern financial
performance and negative in terms of market performance. Board size has been also
proved to have no effect on firm performance.
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