Corporate Governance, Board Diversity, and Firm Value

  1. David A. Carter,
  2. Betty J. Simkins,
  3. W. Gary Simpson

Article first published online: 4 FEB 2003

DOI: 10.1111/1540-6288.00034

Issue

Financial Review

Financial Review

Volume 38, Issue 1, pages 33–53, February 2003

Additional Information

How to Cite

Carter, D. A., Simkins, B. J. and Simpson, W. G. (2003), Corporate Governance, Board Diversity, and Firm Value. Financial Review, 38: 33–53. doi: 10.1111/1540-6288.00034

Author Information

  1. 1 Oklahoma State University, 2 Oklahoma State University simkins@okstate.edu

Publication History

  1. Issue published online: 4 FEB 2003
  2. Article first published online: 4 FEB 2003

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Keywords:

  • corporate governance;
  • diversity;
  • board of directors;
  • financial value

This study examines the relationship between board diversity and firm value for Fortune 1000 firms. Board diversity is defined as the percentage of women, African Americans, Asians, and Hispanics on the board of directors. This research is important because it presents the first empirical evidence examining whether board diversity is associated with improved financial value. After controlling for size, industry, and other corporate governance measures, we find significant positive relationships between the fraction of women or minorities on the board and firm value. We also find that the proportion of women and minorities on boards increases with firm size and board size, but decreases as the number of insiders increases.

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