Governance diversity: Its impact on strategic variation and results

Abstract

This paper investigates the impact of four drivers of Governance diversity, namely gender, tenure, age, and educational attainment, on strategic direction and variation. It then incorporates corporate financial results as a moderating variable, testing how it impacts the links between board diversity and strategic variation. Strategic variation or change is assessed based on measuring deviation from past strategies. Our sample consists of 5011 firm-year observations from 930 firms in the United States between 2010 and 2018. The findings indicate that the four drivers of Governance diversity show a positive relationship between the corporate board of directors and strategic variation/change. However, the strength of the effect depends on overall firm results/performance.