Boardroom diversity (task- and relation-oriented diversity) and financial stability: evidence from Chinese financial listed firms
ISSN: 0114-0582
Article publication date: 24 October 2023
Issue publication date: 29 April 2024
Abstract
Purpose
This study aims to examine the impact of boardroom diversity on the financial stability of Chinese financial listed firms. Boardroom diversity is quantified in the following aspects: relation-oriented diversity and task-oriented diversity.
Design/methodology/approach
Panel data on Chinese financial listed firms between 1998 and 2017 are used in this study. Panel regression is used to analyze the firm data for fixed effects and robust standard errors.
Findings
Task-oriented diversity of the board increases financial stability. Regarding the impact of boardroom diversity on firm risk, the results reveal that task-oriented diversity of the board reduces firm risk, which supports the predictions of this research. Regarding the moderating effect of state ownership on the relationship between boardroom diversity (task- and relation-oriented diversity) and financial stability, the results show that state ownership enhances the positive impact of the board’s task-oriented diversity on financial stability.
Practical implications
Task-oriented diversity of the board enhances the financial stability of Chinese financial listed firms. As existing studies on bank boards in China are limited, the findings of this research can be used when crafting policy initiatives to enhance financial stability.
Originality/value
To the best of the authors’ knowledge, this study is the first to examine the effect of boardroom diversity, particularly task- and relation-oriented diversity, on financial stability. It provides empirical support that boardroom diversity positively affects the financial stability of Chinese financial listed firms. This research also offers empirical evidence that state ownership enhances the positive impact of the board’s task-oriented diversity on financial stability.
Keywords
Acknowledgements
Funding: This study is supported by the project “Green Finance Innovation Cases based on Ecological Civilization, sponsored by China Academic Degrees and Graduate Education Development Center” (Project number is ZT-211017302).
Availability of data: The authors extracted data from Chinese database CSMAR, and data is available upon reasonable request.
Competing interests: The authors declare that they have no competing interests.
Citation
Ning, D., Bhat, K., Nabi, G. and Yinong, R. (2024), "Boardroom diversity (task- and relation-oriented diversity) and financial stability: evidence from Chinese financial listed firms", Pacific Accounting Review, Vol. 36 No. 1, pp. 21-38. https://doi.org/10.1108/PAR-02-2022-0023
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited