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Abstract
Ethnic minorities are significantly underrepresented on the Board of Directors of large US firms. White males comprise nearly twice the proportion of directorships of Fortune 1000 companies as they do the total US population. Ethnic diversity in corporate governance is valued as an asset per two prominent theories: Resource Dependence theory and Agency theory. However, Ethnic diversity on the Board of Directors can also impair the group process per Status theory and constraints such as tokenism and marginalization. This paper is aimed at developing both a theoretical and empirical understanding of the value of ethnic minorities on the Board of Directors of Fortune 500 Food Service and Production firms as it relates to financial performance. Analysis of Fortune 500 Food Service and Production firms finds a positive correlation between ethnic diversity on Board of Directors and market value, return on assets, and return on investment. As a result, empirical evidence suggests that future pressures aimed at increasing diversity in corporate governance may prove financially valuable.
Publication Date
2016
Keywords
Diversity, Corporate Governance, Management, Finance, Board of Directors, Human Resource, Business
Disciplines
Business Administration, Management, and Operations | Organizational Behavior and Theory
Current Academic Year
Freshman
Faculty Advisor/Mentor
Mary Boyes
Rights
© The Author(s)
Included in
Business Administration, Management, and Operations Commons, Organizational Behavior and Theory Commons