The effects of boardroom diversity on firm profitability - evidence from Nordic stock listed companies in the ICT industry

• Main Author: Suomalainen, Joanna
• Other Authors: Ikäheimo, Seppo, Kauppakorkeakoulu, School of Business, Laskentatoimen laitos, Aalto University, Aalto-yliopisto
• Format: Master Thesis
• Language: English
• Published: 2017
• Subjects: board of directors; diversity; profitability; Nordics; ICT industry; laskentatoimi; kannattavuus; johtaminen; hallitukset; Norway; Roa; Iceland
• Online Access: https://aaltodoc.aalto.fi/handle/123456789/30343

Objectives and scope of the study The purpose of this study is to evaluate the effects of boardroom diversity on firm profitability. In this study, diversity is measured with gender, age, education, professional background, nationality, and independence. The study is conducted for the years 2010-2015 with data from stock listed companies operating in the ICT industry in the Nordic countries. The study includes four of the five Nordic countries, i.e. Denmark, Finland, Norway and Sweden, as the data required to conduct the study was not available for Iceland. Research methods The data for this study is collected from the years 2010-2015 from companies operating in the ICT sector listed in either Nasdaq OMX Helsinki, Nasdaq OMX Stockholm, Oslo Børs, or Nasdaq OMX Copenhagen. The data is collected from the companies’ annual reports and from the ORBIS database. The collected data was formulated to a panel data set containing 300 observations. The empirical study is conducted as a statistical analysis, using correlation analysis and multiple linear regression analysis. In the regression analysis, the independent variable is the overall diversity index and its individual diversity factor indexes, i.e. gender diversity, age diversity, diversity in the level of education, diversity in the field of education, diversity in professional background, nationality diversity, and diversity in board independence. The dependent variable is the profitability of the company. The profitability measures used in this study are return on assets (ROA) and profit margin. Results of the study The descriptive statistics of this study show that gender diversity and nationality diversity have increased during the studied period 2010-2015. However, the regression analysis indicates that the overall boardroom diversity, diversity in field of education, and nationality diversity have negative impacts on firm profitability. On the other hand, the analysis indicates that diversity in independence has a positive effect on firm profitability. ...