Diversity of the Board of Directors and Financial Performance of the Firms
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
3. Methods
+ ß4 Leverageit + ß5 Economic cycleit + ß6 IPSAit + €it
4. Results
4.1. Distribution of the STUDY Sample
4.2. Descriptive Statistics of the Study Variables
4.3. Multiple Regression Analysis
5. Discussion of Results
6. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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Variable | Element for | Operationalization by Company | Source |
---|---|---|---|
Dependents | |||
Financial performance | Measure Financial Performance | Quintile (Likert) ROE classification + Quintile (Likert) ROA classification | [5,7,9,20,31,34,35,41] |
Independent | |||
Gender diversity
| Measure the degree of gender diversity | Quintile (Likert) women proportion = No. of woman members of the Board of Directors/Total No. of Board members | [5,7,9,11,12,13,19,20,27,31,34,35,36] |
Nationality Diversity
| Measure the degree of diversity of nationality | Quintile (Likert) nationality diversity proportion = No. of foreign members of the Board of Directors/Total No. of Board members | |
Age diversity
| Measure the degree of age diversity | Quintile (Likert) age diversity proportion = (No. Directors ≤ 50 years + No. Directors > 70 years)/Total No. of Board members | |
Control | |||
Leverage (Dummy) | Determine the level of indebtedness of the company | Total liabilities/Total Equity | [7,31,41,42] |
Economic cycle (Dummy) | Determine which cycle the observation corresponds | Cycle 1 2015–2018; Cycle 2 2019–2020 | |
IPSA (Dummy) | Determine if the company belongs to the Selected Stock Price Index (IPSA) | Yes; No |
No. | Economic Sectors | Period Observations | Number of Companies | ||
---|---|---|---|---|---|
Quantity | Frequency | Quantity | Frequency | ||
1 | Retail | 111 | 10% | 20 | 10% |
2 | Hotels, restaurants and entertainment | 72 | 7% | 13 | 6% |
3 | Manufacturing industry | 250 | 23% | 45 | 22% |
4 | Real estate and construction | 127 | 11% | 27 | 13% |
5 | Mining | 24 | 2% | 4 | 2% |
6 | Forestry and fishing | 39 | 4% | 8 | 4% |
7 | Investment companies | 183 | 17% | 31 | 15% |
8 | Basic supplies | 148 | 13% | 28 | 14% |
9 | Transportation, storage and communications | 104 | 9% | 18 | 9% |
10 | Others | 48 | 4% | 8 | 4% |
11 | Total | 1106 | 100% | 202 | 100% |
Variables | Average | Median | Mode | Stand. Dev. | Minimum | Maxium |
---|---|---|---|---|---|---|
n = 1106 | n = 1106 | n = 1106 | n = 1106 | n = 1106 | n = 1106 | |
Profitability (Dependent) | ||||||
% Return on equity (ROE) | 7.89 | 6.38 | 0.00 | 19.11 | −90.67 | 186.32 |
% Return on assets (ROA) | 3.06 | 2.99 | 0.00 | 9.79 | −68.88 | 88.49 |
Return on equity Likert (ROE) | 2.99 | 3.00 | 3.00 | 0.71 | 1.00 | 5.00 |
Return on assets Likert (ROA) | 2.98 | 3.00 | 3.00 | 0.73 | 1.00 | 5.00 |
Financial Performance Likert | 3.09 | 3.00 | 3.00 | 0.73 | 1.00 | 5.00 |
Board Diversity (Independent) | ||||||
No. Board Members | 7.75 | 7.00 | 7.00 | 3.38 | 1.00 | 47.00 |
% Gender diversity | 7.58 | 0.00 | 0.00 | 12.17 | 0.00 | 80.00 |
% Nationality diversity | 10.67 | 0.00 | 0.00 | 20.77 | 0.00 | 100.00 |
% Age diversity | 39.52 | 40.00 | 42.86 | 21.61 | 0.00 | 100.00 |
Gender diversity Likert | 1.51 | 1.00 | 1.00 | 0.83 | 1.00 | 5.00 |
Nationality diversity Likert | 1.58 | 1.00 | 1.00 | 1.09 | 1.00 | 5.00 |
Age diversity Likert | 3.46 | 4.00 | 5.00 | 1.27 | 1.00 | 5.00 |
No. | Economic Sectors | Const. (Est. Error) | Gender Coeff./(Est. Error) | Nation. Coeff./(Est. Error) | Age Coeff./(Est. Error) | R2 Fitted/(Global Signif.) | Control Variables (Dummy) | ||
---|---|---|---|---|---|---|---|---|---|
Lever. | Econ. | IPSA. | |||||||
1 | Retail | 4.182 *** | −0.282 *** | 0.204 ** | −0.100 | 0.095 | Yes | No | Yes |
0.462 | 0.101 | 0.102 | 0.063 | 0.011 | |||||
2 | Hotels, restaurants and entertainment | 4.211 *** | −0.231 * | −0.213 | −0.227 ** | 0.094 | No | No | No |
0.611 | 0.126 | 0.147 | 0.098 | 0.050 | |||||
3 | Manufacturing industry | 4.034 *** | −0.224 *** | −0.106 ** | −0.031 | 0.036 | No | No | Yes |
0.302 | 0.088 | 0.049 | 0.046 | 0.020 | |||||
4 | Real estate and construction | 2.746 *** | 0.206 ** | −0.063 | −0.035 | 0.056 | No | No | No |
0.465 | 0.084 | 0.153 | 0.057 | 0.043 | |||||
5 | Mining | 2.544 * | −0.194 | 0.368 | 0.021 | 0.582 | Yes | No | No |
1.422 | 0.347 | 0.336 | 0.190 | 0.001 | |||||
6 | Forestry and fishing | 3.752 *** | −0.039 | −0.812 | 0.169 | 0.070 | Yes | No | No |
0.586 | 0.396 | 0.332 | 0.171 | 0.194 | |||||
7 | Investment companies | 3.700 *** | −0.019 | −0.055 | −0.011 | −0.005 | No | No | No |
0.350 | 0.069 | 0.090 | 0.050 | 0.539 | |||||
8 | Basic supplies | 2.869 *** | −0.016 | 0.033 | 0.017 | 0.008 | Yes | No | No |
0.282 | 0.060 | 0.041 | 0.046 | 0.306 | |||||
9 | Transportation, storage and com. | 3.820 *** | −0.334 | −0.187 * | −0.066 | 0.050 | No | No | No |
0.484 | 0.215 | 0.103 | 0.078 | 0.070 | |||||
10 | Others | 2.912 *** | −0.076 | 0.129 | 0.202 * | 0.148 | Yes | No | No |
0.732 | 0.243 | 0.330 | 0.118 | 0.037 | |||||
11 | All economic sectors | 3.166 *** | −0.024 | −0.007 | −0.034 ** | 0.014 | Yes | No | No |
0.118 | 0.027 | 0.021 | 0.017 | 0.001 |
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Arenas-Torres, F.; Bustamante-Ubilla, M.; Campos-Troncoso, R. Diversity of the Board of Directors and Financial Performance of the Firms. Sustainability 2021, 13, 11687. https://doi.org/10.3390/su132111687
Arenas-Torres F, Bustamante-Ubilla M, Campos-Troncoso R. Diversity of the Board of Directors and Financial Performance of the Firms. Sustainability. 2021; 13(21):11687. https://doi.org/10.3390/su132111687
Chicago/Turabian StyleArenas-Torres, Felipe, Miguel Bustamante-Ubilla, and Roberto Campos-Troncoso. 2021. "Diversity of the Board of Directors and Financial Performance of the Firms" Sustainability 13, no. 21: 11687. https://doi.org/10.3390/su132111687