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Title: The performance effects of board heterogeneity: what works for EU banks?
Authors: Arnaboldi, Francesca 
Casu, Barbara 
Kalotychou, Elena 
Sarkisyan, Anna 
Major Field of Science: Social Sciences
Field Category: Economics and Business
Keywords: Bank performance;Board composition;Board diversity;Corporate governance
Issue Date: 9-Jun-2018
Source: European Journal of Finance, 2018, pp. 1-28
Start page: 1
End page: 28
Journal: The European Journal of Finance 
Abstract: We examine the impact of board heterogeneity on the performance of EU-listed banks in the wake of the global financial crisis. In a comprehensive set-up, we consider standard board features (type, tenure, size, and age of board members) as well as board diversity features (gender diversity, employee representation, internationalisation, and age diversity). We propose a diversity index, which summarises the different dimensions of diversity, and control for unobserved heterogeneity and reverse causality. Our analysis uncovers a complex relationship between board heterogeneity and bank performance, which is influenced by market conditions and by national culture. Overall board diversity does not seem to affect bank performance, but it does decrease performance variability during the Eurozone crisis and in countries culturally more open to diversity. Different board and diversity features have a positive impact on bank performance (size, tenure, and employee representation); the relationship is non-linear, with the effect of diversity being more relevant when there is a significant proportion of minority representatives. While substantial board internationalisation has a negative impact on bank performance, the presence of foreign directors appears to be less detrimental during the Eurozone crisis and in countries that are more welcoming towards diversity.
ISSN: 1351-847X
DOI: 10.1080/1351847X.2018.1479719
Rights: © Taylor & Francis
Type: Article
Affiliation : Università degli Studi di Milano 
University of London 
Università degli Studi di Modena e Reggio Emilia 
Cyprus University of Technology 
University of Essex 
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