Original Research

Investigating board diversity in South Africa

Nadia Mans-Kemp, Suzette Viviers
Journal of Economic and Financial Sciences | Vol 8, No 2 | a100 | DOI: https://doi.org/10.4102/jef.v8i2.100 | © 2019 Nadia Mans-Kemp, Suzette Viviers | This work is licensed under CC Attribution 4.0
Submitted: 21 December 2017 | Published: 30 July 2015

About the author(s)

Nadia Mans-Kemp, Department of Business Management, Stellenbosch University, South Africa
Suzette Viviers, Department of Business Management, Stellenbosch University, South Africa

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Abstract

The issue of board diversity has been widely debated. Given the lack of conclusive empirical evidence, this study investigated the relationship between gender and race board diversity and the financial performance of South African companies. The sample covered 1 542 annual observations over the period 2002 to 2012. The percentage of female and black directors of companies listed on the Johannesburg Stock Exchange increased significantly over the research period. Board diversity differed considerably across industries. A statistically significant positive relationship existed between the percentage of both female and black directors and earnings per share. In contrast, a statistically significant negative relationship was found between the percentage of both female and black directors and total shareholder return. Given the lack of a clear business case, the question arises as to how board diversity on the JSE can be encouraged. The researchers recommend that more attention should be given to the development and mentoring of diverse board candidates.

Keywords

board diversity; gender diversity; race diversity; accounting-based financial performance; market-based financial performance

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