Kara Hollis

Behind Closed Doors: the Effects of Boardroom Diversity and Dynamics on Company Performance Kara Hollis

This thesis examines the effects of different forms of corporate board diversity on company financial performance.  Specifically, the study considers whether types of informational and demographic diversity, as well as the level of familiarity among board members, lead to improved functioning of the board.  To determine the relationship between board diversity and firm performance, the thesis combined quantitative and qualitative data, employing statistical analysis to determine the relationship between various forms of board diversity and firm financial performance of Fortune 1000 corporations, as measured by return on assets (ROA) and return on investments (ROI).  It also utilized interviews with eleven Fortune 500 board directors to gain insight into the dynamics behind the boardroom doors that could facilitate or discourage the contributions of different forms of diversity.  By combining insights from these two data sources, gender diversity was found to enhance firm performance, while diversity in board experience (measured by the number of boards directors have served on during their career) had a detrimental effect.