Age and Educational Diversity in Corporate Boards: Does It Affect Risk-Taking Behaviour?

This study explores the various dimensions of board diversity and its impact on firm risks in an emerging market like India. The research concentrates on large and mid-cap companies listed in the BSE. To quantify diversity, researchers used percentage and Blau index, and for firm risk, volatility of return on assets and financial leverage are used separately. To estimate the regression result, panel regression is applied. The findings document that structural diversity is significant to overall firm risk and financial risk in few models, whereas age and educational diversity show statistically insignificant effect on both risk measures. This empirical research helps to understand the relationship between board diversity and risk-taking behavior and how board diversity is a case of deeper insight for corporate decisions. Furthermore, the insignificant results of diversity are not considered in this research but it is important for researchers to understand the theoretical reasoning behind the effect of each separate diversity aspect. The investigation takes into consideration not just one dimension of diversity but includes three dimensions viz. structural, age and educational diversity. There is dearth of studies that relates board diversity with risk. Keywords: Board diversity, Structural Diversity, Age Diversity, Educational Diversity, Firm Risk.