The Impact of Board Diversity on Risk Disclosure: Conceptual Paper

Risk disclosure is a significant concern for most stakeholders; therefore, board diversity may be crucial in improving the quality of risk disclosure.Prior research has investigated the influence of a singular or a restricted set of aspects of board diversity on risk disclosure.The present study establishes a theoretical framework that facilitates future empirical research aimed at creating a composite measure of board diversity to assess its influence on risk disclosure.Creating a composite measure yields a more precise representation than an individual measure, as boards are perceived as an interconnected system rather than as discrete components.The current study proposes to construct a composite measure of board diversity, consisting of gender, foreign directors, political directors, overlapping membership, and multiple directorships.