From Diversity to Profitability: The Impact of Board Composition, Life Cycle, and Technological Segmentation on Governance Effectiveness

The board of directors plays a central role in corporate governance, exerting a complex and profound impact on a company's long-term development. This study examines the impact of board diversity on corporate profitability, focusing on listed manufacturing companies in Shanghai and Shenzhen A-shares from 2013 to 2022. The findings reveal an inverted U-shaped relationship between board diversity and corporate profitability: moderate diversification enhances profitability, while excessive diversity diminishes it. Robustness checks, including variations in sample periods, dependent variables, and the exclusion of highly polluting firms, confirm the results. Moreover, the mean effect is significant in mature and declining firms, as well as in low- and medium-tech manufacturing industries, while no significant impact was observed in growing and high-tech firms. This study offers precise guidance for optimizing board diversity to enhance corporate profitability.