CHAPTER 1
The first chapter aims to set the ground, providing a brief definition of the corporate governance according to worldwide practices and focusing on the role and the functions of the board of directors. To reach this goal, a punctual review of the different theoretical frameworks coping with this topic is provided, putting in evidence the main differences as well as the principal points in common. Specifically, the agency theory, the stakeholders theory, the stewardship theory, the resource dependency theory, and the institutional theory are analyzed. Moreover, the role of BoDs is analyzed together with the features and the overview of "good" governance practices according to existing literature and practice.
CHAPTER 2 The international literature has deepened the importance of analyzing the composition of BoDs in order to understand their effectiveness and efficiency. Along this path of study, this chapter aims to investigate on the board diversity reviewing the main contributes developed on this topic. Specifically, the chapter illustrates the different sources in terms of diversity in the boardrooms, putting in evidence the role of regulations and institutional investors in promoting the growth of this diversity.
The analysis is proposed through a cost-benefit approach, to illustrate the potential advantages and the relative risks connected to the diversity in BoDs.
CHAPTER 3
The chapter proposes a review of the literature about the impacts on the firm generated by the board diversity. Specifically, the board diversity has been investigated by previous literature in terms of impacts on the corporate social responsibility of the firm, on the firm's innovation, on the risks faced by the firm and on the firm's organizational performance. A deeper focus is then provided about the impacts of the board diversity on the firm's financial performance which is also the focus of the empirical analysis offered in Chapter 4. Moreover, this analysis is propaedeutic to the development of a new conceptual framework proposed by the authors, and illustrated in the following chapter, to investigate on the effects of diversity in boardrooms in terms of financial and economic outcomes of the firm.
CHAPTER 4
This chapter develops the empirical analysis with the final aim to support the new conceptual model proposed. Specifically, to construct the model, we analyze the various features of diversity (such as gender, age, role, nationality, experience, level of education, background, and so on) and, for each diversity aspect, an index of diversity has been built. Since each diversity aspect may be categorical or quantitative, different measures of diversity have been considered. Precisely, for categorical variables we use the (relative) entropy; while for quantitative variables, we use the standard deviation. The impact of these variables on the firm performance is tested through both market-based and accounting-based measures. In order to catch the long term effects, the analysis has been conducted over a 9-year period, from 2010 to 2018. After providing descriptive statistics, correlations and results, the chapter ends with some conclusions about the further developments to guide future research for scholars and academics as well as with some guidelines for practitioners interested in studying the good practices and the effectiveness of the board seen as a corporate governance mechanism.
About the Author: Barbara Sveva Magnanelli is Assistant Professor of Accounting and Management at the Department of Business Administration of John Cabot University, Italy. Barbara has previously been a Visiting Researcher at Queensland University of Technology, in Brisbane, Australia. Her main research interests are related to corporate governance, with particular regard to the board of directors and financial statement frauds. She has also focused her studies on social enterprises and corporate social responsibility. Barbara teaches Financial Accounting, Managerial Accounting, Financial Reporting, Performance Measurement, and Corporate Governance courses for undergraduate and graduate programs.
Luca Pirolo is Assistant Professor of Management at Luiss Business School - Luiss University, Italy. Luca is the Director of the "Master Degree Programs" at Luiss Business School and the Director of Luiss Creative Business Center. He has been a Visiting Researcher at Uppsala University, Sweden and at Queensland University of Technology, in Brisbane, Australia. His research activities can be clustered into two main fields of analysis: the creative and cultural industries, as a field to investigate the relationship between team composition and firm performance, and the corporate governance with a specific focus on the composition of the board of directors.
