Foreign Ownership and Board Cultural Diversity – Research Seminar by Bart FrinjsRegular Research Seminars of Corvinus University of Budapest, Institute of Finance.
Date and Time: 05 May 2023, Friday, 11:40-12:40 (Budapest time)
Venue: Corvinus Main Building, Room E.III.
Bart Frinjs: Foreign Ownership and Board Cultural Diversity
Abstract: This paper investigates the relationship between foreign ownership and board cultural diversity, using detailed hand-collected data on firm ownership and board cultural diversity from Sweden. Based on 13,655 directors’ nationalities, we find that board cultural diversity increases with the presence of foreign ownership. However, cultural diversity promoted by foreign owners does not translate into firm value creation. In addition, foreign owners do not support other types of board diversity. Overall, these findings suggest homophily, as foreign owners seem to promote cultural diversity only in the interest of “feeling connected” to other like-minded people. Additional analyses show that the positive relationship between foreign ownership and board cultural diversity is more pronounced in certain types of ownership structures (family firms, dual-class share firms, and concentrated ownership). We further present that foreign owners’ country of origin plays a role in board composition.
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