CORPORATE BOARD DIVERSITY AND ITS ROLE IN ELEVATING FINANCIAL PERFORMANCE: EVIDENCE FROM THE NIGERIAN INSURANCE INDUSTRY
Keywords:
Demographic diversity, gender diversity, board nationality, corporate governance, women directorsAbstract
This paper delves into the realm of demographic diversity within corporate boards, specifically focusing on the dimensions of gender diversity and board nationality. Demographic diversity encompasses a range of attributes including gender, nationality, ethnicity, interlocks, and political connections of board directors. Gender diversity, characterized by the proportional representation of women on corporate boards, has emerged as a pivotal area of interest for researchers and policymakers worldwide. The presence of women directors varies across countries and continents, prompting a growing interest in advocating for their inclusion in company boards. Notably, corporate governance codes in the UK and the U.S. recommend women's representation, while countries like Spain and Norway have enacted legislation mandating gender quotas on boards to enhance corporate governance quality. Board nationality, often referred to as boardroom globalization or foreign board directors, is a significant facet of corporate governance. This paper explores how board nationality can impact a company's operational success and financial performance. Foreign directors contribute to financial monitoring, strategic improvement, risk minimization, ethical enhancement, and the elevation of financial reporting quality. Their presence is often associated with improved decision-making, diversification strategies, and overall board performance. Drawing on a comprehensive review of existing literature and empirical evidence, this study offers insights into the potential benefits brought about by gender diversity and board nationality. It underscores how increased representation of women on boards can lead to enhanced ethical values, independent decision-making, and greater transparency, which in turn contribute to improved financial performance. Similarly, foreign directors are linked to the strengthening of strategic management, risk mitigation, and overall corporate governance effectiveness. By investigating the dynamics of gender diversity and board nationality, this research highlights the importance of these dimensions in shaping corporate governance structures and outcomes. The findings emphasize the need for informed policymaking and strategic decisions that align with the goals of transparency, ethical conduct, and financial performance. Ultimately, this study enriches the discourse on demographic diversity within corporate boards, providing valuable insights for researchers, policymakers, and corporate stakeholders alike.
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