Board nationality and educational background diversity and corporate social performance

Abstract

Purpose

This paper aims to examine the relationship between the nationality and educational background diversity of directors serving on corporate boards and the firms’ corporate social performance (CSP).

Design/methodology/approach

This study measures nationality diversity by directors’ national citizenship and measures educational background diversity by countries from which they earned their undergraduate and post undergraduate degrees. It measures firms’ CSP using the MSCI ESG ratings. The study uses both univariate and multivariate analyses to empirically test the hypotheses.

Findings

Using a sample of US firms, the authors find that board nationality diversity and educational background diversity are positively associated with CSP. The findings suggest that improving director nationality diversity and educational background diversity could improve firms’ social performance.

Originality/value

This study shows that the increasing trend of foreign nationals in the US boards could shift the focus of US corporations to be more stakeholder-oriented.

Citation

Harjoto, M.A., Laksmana, I. and Yang, Y.w. (2019), "Board nationality and educational background diversity and corporate social performance", Corporate Governance, Vol. 19 No. 2, pp. 217-239. https://doi.org/10.1108/CG-04-2018-0138