Too Much of the Right Kind? Board Sociopolitical Diversity and Corporate Misconduct

ABSTRACT This study examines how sociopolitical diversity on corporate boards, reflected in directors' educational pedigree and professional specializations, shapes corporate misconduct under constrained innovation. Using panel data on firms listed on Japan's Nikkei 225 from 2007 to 2018, we find that directors from non‐elite universities are associated with lower levels of corporate misconduct in a curvilinear pattern, while directors with technical or legal backgrounds are associated with higher levels of misconduct. The results further show that this curvilinear relationship varies with firms' R&D investment. Under low R&D conditions, the misconduct‐reducing effect of non‐elite directors dominates, whereas the nonlinear dynamics become more pronounced when firms possess greater innovation capacity. In contrast, technical and legal expertise tends to substitute for vigilant oversight, particularly when innovation resources are constrained. By leveraging Japan's status‐stratified governance system, this study advances a contingent sociopolitical view of board diversity and corporate misconduct.