The Downside of Cultural Diversity on Corporate Boards

Diversity in corporate boards is a hot topic. We contribute to the debate on the role of diversity by empirically documenting that greater national cultural diversity in corporate boards leads to lower performance at UK firms accounting for more than 95 percent of the market value of London Stock Exchange-listed companies. The negative impact is economically significant, with a reduction in return on equity of 1.43 percent for firms with higher levels of cultural diversity (those at or above the 75th percentile) versus firms with lower levels of cultural diversity (those at or below the 25th percentile). Why … Read more