Boards diversity) i.e. social, political ; cultural

Boards of directors make decisions that can impact us, our community, and the country, that is why it is important that membership on corporate boards be the true representative of a company’s owners i.e. shareholders.

Boards of directors choose CEOs. They make decisions about executive compensation, whether to buy, sell, or merge with other companies, where corporate offices close and relocate, and how much priority a company gives to issues other than profits, such as social responsibility. Mostly people today have no knowledge about the makeup of corporate boards, even in the companies they work for. These stakeholders would be surprised to learn how little diversity of thought and experience exists in the corporate boardrooms and executive suites of American businesses (Hunt, et al.

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, 2015). Corporate Governance do effect the overall decision making of a firm. Diversity of the board of directors is considered a significant aspect which can amplify the quality of corporate decision making.Organizations all over the world has realized that a heterogeneous board is far better in terms of effectiveness, creativity and problem solving. This heterogeneity is the diversity of board which can be either observable (demographic diversity) i.

e. age, ethnicity, race, gender, religion, professional qualification or unobservable (cognitive diversity) i.e. social, political ; cultural values, knowledge, expertise, risk appetite.

Milliken and Martin (1996).Various researchers have studied the multifaceted diversity encompassing gender, age, experience and cross-culture diversity and its effects on the firm’s performance.


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