Impact of Board Diversity on Firm Value: A Comparative Analysis of Chinese Financial and Non-Financial Listed firms

Abstract

The study examines the impact of boardroom diversity on firm value, across different nature of firms, financial and non-financial listed firms. We extracted data for our sample from Chinese database CSMAR over the period 1999-2016. Our sample includes Chinese non-financial and financial listed firms. We further excluded B flag listed firms, monthly and quarterly data. Finally, our dataset includes annual data and is comprised of 1,793 firms and 17087 observations for non-financial listed firms, and data for financial listed firms is comprised of 655 observations and 77 firms. This research provides fresh perspectives in several key areas. Firstly, it explores how diversity within the boardroom influences firm value, presenting empirical findings that task-related board diversity positively affects firm value. Secondly, it highlights that minimizing firm risk contributes to higher firm value. To reinforce this relationship, the study includes robustness tests assessing how boardroom diversity impacts risk levels. The findings suggest that task-oriented diversity within the board contributes to lowering firm risk, thereby supporting the core conclusion that such diversity enhances overall firm value. Third, the study makes comparative analysis across financial and non-financial listed firms. Results are found consistent and suggest that board diversity enhances firm value.