Accounting Seminar（2016-09）

Topic:Corporate Innovation: Does Diverse Board Help?

Speaker:Carl R. Chen, University of Dayton

Time:Monday,June 6, 10:00-11:30

Place:Room217, Guanghua Building 2

Abstract:

This study examines the impact of board diversity on corporate innovation. A comprehensive board diversity index is constructed on the basis of six sub-indexes including demographic diversity, educational diversity, professional diversity, director experience diversity, managerial traits diversity, and cultural diversity. We show that corporate innovation increases with board diversity, and this effect is stronger for firms with more diverse business segments. Further analyses indicate that the significant impact of board diversity on innovation mainly lies in competitive industries. We also find different sub-indexes having different relationships with innovation. While educational and professional diversity is more dominate in determining innovations, professional diversity is solely responsible for the innovation efficiency. We argue and find evidence to support the premise that the ability of a diverse board to think outside the box is key to corporate innovation. Overall, we provide evidence for one of the most important but underexplored benefits of board diversity—innovation productivity improvement.

Introduction: