Does board ethnic diversity mitigate bankruptcy risk?

We investigate the relationship between the ethnic diversity of corporate boards, measured by the ratio of minority directors, and bankruptcy risks among manufacturing firms included in S&P 1500. Our findings indicate that companies with a higher representation of minority directors on their boards demonstrate decreased bankruptcy risks compared to companies with lower levels of minority board diversity. This study implies that boards with diverse ethnic backgrounds are better equipped to make balanced decisions and manage bankruptcy risks. • The study explores how board ethnic diversity affects bankruptcy risks in S&P 1500 manufacturing firms. • A higher representation of minority directors is linked to reduced bankruptcy risks. • These findings indicate that diverse boards may enhance decision-making balance and improve bankruptcy risk management.