Board Diversity and Firms Performance: An Empirical Study of Indian Publically Listed Companies Using Panel Data

The present research finds out the effect of board diversity on the financial performance of publically listed Indian companies under the Bombay Stock Exchange (BSE 200). The aim is to investigate the influence of board diversity on firm performance, in terms of profitability and growth, the study made use ROA, ROE and ROCE as financial measures. The overall empirical investigation reveals a mixed set of results. The findings indicate that board diversity attributes such as foreign directors, directors with good qualification and a number of board meetings held every year are significantly influencing the performance level of firms (in terms of profitability of - ROA, ROE, and ROCE). Diversity always tends to have an impact on the decision making or strategic movements of the board members. It brings innovation, controls the working and slows decision – making process. The present study helps to make sense of the inconclusive results of past studies and provides relevant policy suggestions to the policymakers and modern business management to improve the firm’s performance.