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.