Board Diversity and Firm Performance: Evidence from the Czech Republic

• Thesis title in Czech: Diverzita ve statutárních orgánech společností a jejich výkonnost: případ České republiky
• Thesis title in English: Board Diversity and Firm Performance: Evidence from the Czech Republic
• Key words: Diverzita ve vedení firmy, výkonnost firmy, determinant výkonnosti, vliv diversity, Česká republika
• English key words: Board diversity, firm performance, determinants of firm performance, diversity impact, Czech Republic
• Academic year of topic announcement: 2018/2019
• Thesis type: diploma thesis
• Thesis language: angličtina
• Department: Institute of Economic Studies (23-IES)
• Supervisor: Jaroslav Pavlíček, M.A.
• Author: hidden - assigned by the advisor
• Date of registration: 21.05.2019
• Date of assignment: 22.05.2019
• Date and time of defence: 15.09.2020 09:00
• Venue of defence: Opletalova - Opletalova 26, O206, Opletalova - místn. č. 206
• Date of electronic submission: 29.07.2020
• Date of proceeded defence: 15.09.2020
• Opponents: Mgr. Tereza Palanská

References

CARTER, D. A., D'SOUZA, F., SIMKINS, B. J., & SIMPSON, W. (2010). The Gender and Ethnic Diversity of US Boards and Board Committees and Firm Financial Performance. Corporate Governance: An International Review, 18(5), pp. 396-414.
ČERNÍK, D. (2016). Gender board diversity and its impact on Firm performance in the Czech Republic.
CHRISTIANSEN, L., LIN, H., PEREIRA, J., TOPALOVA, P., & TURK, R. (2016). Gender Diversity in Senior Positions and Firm Performance: Evidence from Europe.
DARMADI, S. (2011). Board diversity and firm performance: the Indonesian evidence. Corporate Ownership and Control.
HUNT, V., DIXON-FYLE, S., PRINCE, S., YEE, L. (2018). Delivering through Diversity.
Kılıç, M., & KUZEY, C. (2016). The effect of board gender diversity on firm performance: evidence from Turkey. Gender in Management: An International Journal, 33(7), pp. 434-455.
LÜCKERATH-ROVERS, M. (2013). Women on boards and firm performance. Journal of Management and Governance, pp. 491-509.
OECD. (2019). OECD Corporate Governance Factbook 2019.
SMITH, N., SMITH, V., & VERNER, M. (2006). Do Women in Top Management Affect Firm Performance? A Panel Study of 2500 Danish Firms.
TERJESEN, S., COUTO, E. B., & FRANCISCO, P. M. (2015). Does the presence of independent and female directors impact firm performance? A multi-country study of board diversity. Journal of Management and Governance.

Preliminary scope of work in English

The topic of diversity has received increasing attention in the academic literature and other sources as well during the past few years. According to many studies, diversity in the boardroom brings many benefits for the company. Based on Hunt, Prince, Dixon-Fyle and Yee (2018) some of them are improved customer orientation, greater employee satisfaction or better decision making and innovation. The most successful corporate boards have people with wide varieties of skills and experience levels, from all walks of life, because when you build a diverse board, you bring in new ways of thinking, insights and different perspectives on consumer wants and needs.

The numbers of woman and minorities in the workforce have been rising over the past years, but the proportion of women reaching the top positions is still low in many countries. For this reason, there should be more studies examining the board structure itself and then the impact of the diversity on the firm performance.

Although many studies examining the board diversity have already been made, they provided mixed evidence. For example, Darmadi (2011) found a negative relationship between the gender diversity and firm performance and no impact of national diversity on the firm performance in Indonesia. On the other hand, Smith et al. (2006) said that there is a positive influence of the gender diversity on the firm performance among Danish firms. While the topic has been studied in many countries there is a lack of academic literature examining the situation in the Czech Republic. Among the few is Černík (2016) who examined the impact of gender diversity on the return on assets in the Czech Republic. However, he has not found any significant relationship between the gender board diversity and the firm performance. Based on the mixed evidence of the existing literature and its lack of focus on the Czech Republic, my aim is to research this area more deeply.

Also, one characteristic of the research that has been already made is that the research was primarily focused on the gender diversity (Lückerath-Rovers, 2011, Terjesen, Couto, Francisco, 2015, Kılıç, Kuzey (2016)) and there is a lack of papers examining the other kinds of diversity (Darmadi, 2011) – e.g. nationality, age, religion, sexual orientation or disability.

If it is actually the case that more diverse boards have a positive effect on firm performance, this may be a strong argument for having more diverse top management. Which would be one of the aspects of good corporate governance. OECD (2019) stated in the OECD Corporate Governance Factbook that companies should recognize the importance of gender diversity in the board and they should try to find a way how to enhance it.

Therefore, the main motivation for this paper is to examine the structure of boards of Czech private companies – to find out whether Czech boards are diverse or not – and also examine the relationship between the firm performance and the board diversity in a wider sense than just a gender to broaden the research in this area in the Czech Republic.