5. Empirical Analysis on Board Diversity

This chapter develops the empirical analysis with the final aim to support the new conceptual model proposed. Specifically, to construct the model, we analyse the various features of diversity (namely age, tenure, gender, nationality, level of education, educational background, directorship experience, role, independence, remuneration) and, for each diversity aspect, an index of diversity has been created. Since each diversity aspect may be categorical or quantitative, different measures of diversity have been considered. Precisely, for categorical variables we use the (relative) entropy, while for quantitative variables, we use the standard deviation. The impact of these variables on the firm performance is tested through both market-based and accounting-based measures. In order to catch the long-term effects, the analysis has been conducted over a 9-year period, from 2010 to 2018. After providing descriptive statistics, correlations, and results, the chapter ends with some conclusions about the further developments to guide future research for scholars and academics as well as with some guidelines for practitioners interested in studying the good practices and the effectiveness of the board seen as a corporate governance mechanism.