Board diversity, firm risk, and corporate policies

Gennaro Bernile, Vineet Bhagwat, Scott Yonker

Research output: Contribution to journalArticlepeer-review

93 Scopus citations


We examine the effects of diversity in the board of directors on corporate policies and risk. Using a multidimensional measure, we find that greater board diversity leads to lower volatility and better performance. The lower risk levels are largely due to diverse boards adopting more persistent and less risky financial policies. However, consistent with diversity fostering more efficient (real) risk-taking, firms with greater board diversity also invest persistently more in research and development (R&D) and have more efficient innovation processes. Instrumental variable tests that exploit exogenous variation in firm access to the supply of diverse nonlocal directors indicate that these relations are causal.

Original languageEnglish (US)
Pages (from-to)588-612
Number of pages25
JournalJournal of Financial Economics
Issue number3
StatePublished - Mar 2018


  • Board of directors
  • Diversity
  • Firm risk
  • Governance
  • Performance

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


Dive into the research topics of 'Board diversity, firm risk, and corporate policies'. Together they form a unique fingerprint.

Cite this