Directors in corporate boards are very important in facilitating firm strategy, monitoring management, and advising about organizational goals. A vast volume of research has gone into discovering how board composition, processes, and activities affect corporate governance and performance outcomes. In the same light, major attributes that have been studied in relation to firm-level outputs are board gender diversity, independence, skills and experience diversity, regularity of meetings, size, and cultural background of the directors. Gender diversity is positively related to board process and decision quality. Women directors bring about more engaged debates and higher levels of preparation among their male colleagues. However, empirical evidence concerning diversity and its relation to firm performance metricsprofitability and market valuehas been quite mixed. Independence of the director from management is wanted to provide strength to the board's monitoring function, but no consistent correlation with improved outcomes has been found. Some firms would certainly use this inside information and expertise better than others. Functional background diversity enriches decision-making by bringing a different set of perspectives through the multi-industry experiences of directors and their respective skillsets.
Zhou et al. (Tue,) studied this question.