Board of Director Diversity and Firm
Financial Performance
Niclas L. Erhardt,* James D. Werbel and
Charles B. Shrader
This study examines the relationship between demographic diversity on boards of directors
with firm financial performance. This relationship is examined using 1993 and 1998 financial
performance data (return on asset and investment) and the percentage of women and minorities
on boards of directors for 127 large US companies. Correlation and regression analyses
indicate board diversity is positively associated with these financial indicators of firm performance.
Implications for both strategic human resource management and future research
are discussed.
Keywords: Firm organisation, diversity, performance, heterogeneity