What is it about?
This paper aims to examine the relationship between the nationality and educational background diversity of directors serving on corporate boards and the firms’ corporate social performance (CSP). This study measures nationality diversity by directors’ national citizenship and measures educational background diversity by countries from which they earned their undergraduate and post undergraduate degrees. It measures firms’ CSP using the MSCI ESG ratings. The study uses both univariate and multivariate analyses to empirically test the hypotheses.
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Why is it important?
Globalization has a significant impact on the composition of boards of directors in publicly traded corporations around the world. Capital movements across borders have significantly affected the composition of firms’ ownership, and therefore, the composition of boards of directors who represent the interests of these international shareholders. As the number of foreign directors serving on US corporate boards increases, it is imperative to examine and understand the impact of having directors with different nationalities on firm performance.
Perspectives
Using a sample of US firms, the authors find that board nationality diversity and educational background diversity are positively associated with CSR performance. The findings suggest that improving director nationality diversity and educational background diversity could improve firms’ social performance. This study shows that the increasing trend of foreign nationals in the US boards could shift the focus of US corporations to be more stakeholder-oriented
Dr Maretno Agus Harjoto
Graziadio Business School - Pepperdine University
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This page is a summary of: Board nationality and educational background diversity and corporate social performance, Corporate Governance, October 2018, Emerald,
DOI: 10.1108/cg-04-2018-0138.
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