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Do Institutional or Foreign Shareholders Influence National Board Diversity? Assessing Board Diversity Through Functional Data Analysis

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Mathematical-Statistical Models and Qualitative Theories for Economic and Social Sciences

Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 104))

Abstract

This study analyses the external antecedents of board diversity. We use the resource-based view and the agency theory to investigate the impact of institutional and foreign shareholders on national board diversity. Because we highlight that the most used diversity indices neglect the multidimensional aspect of diversity, we refer to diversity profiles and suggest the functional data analysis approach for diversity assessment in corporate governance studies. Specifically, we use the parametric functional analysis of variance in analysing the influence exerted by institutional and foreign shareholders on national board diversity. Focusing on a sample of 1,230 Italian medium-large firms, our results show that institutional shareholders do not influence national board diversity, while foreign shareholders strongly affect it, especially when they hold more than 50% of shares. Thus, we address the research gap on the determinants of national board diversity and enrich comparative European research on this topic.

Individual Contributions of the Authors

The authors have contributed to the chapter as follows:

Fabrizio Maturo: Sections 14.3.3, 14.4.1, 14.4.2.

Stefania Migliori: Introduction, Sections 14.1; 14.2.1, 14.2.2, 14.2.3.

Francesco Paolone: Sections 14.3.1, 14.3.2, Abstract, Conclusions.

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Notes

  1. 1.

    The main issue in measuring diversity is that richness and evenness are confounded when a single index is considered. Indeed, a board with few species and high evenness could have the same diversity as a board with many species and low evenness. Thus, different indices could lead to different firms ranking according to the nationality of their boards.

  2. 2.

    We assume that there is a single factor with K different groups (k = 1, 2,…, K) and \( N = \sum\nolimits_{i = 1}^{K} {n_{k} } \) total observations, with nk observations within each group; then, the model for the i-th observation (i = 1, 2,…., N) in the k-th group can be expressed by \( \Delta_{ik} (\beta ) = \mu (\beta ) + \gamma_{k} (\beta ) + u_{ik} (\beta ) \), where \( \Delta_{ik} (\beta ) \) is the functional response in the k-th group, \( \mu (\beta ) \) is the grand mean function, \( \gamma_{k} (\beta ) \) is the functional effect of being in a specific group, and \( u_{ik} (\beta ) \) is the residual functions (unexplained variations for the i-th observation within the k-th group).

  3. 3.

    To assess whether there are significant differences between the groups, a point wise F statistic can be used (Ramsay and Silverman 2005; Di Battista et al. 2016b).

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Authors and Affiliations

  1. Department of Management and Business Administration, University of Chieti-Pescara, Pescara, Italy

    Fabrizio Maturo & Stefania Migliori

  2. Law Department, University of Naples, Parthenope, Napoli, Italy

    Francesco Paolone

Authors
  1. Fabrizio Maturo
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  2. Stefania Migliori
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  3. Francesco Paolone
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Correspondence to Fabrizio Maturo .

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Editors and Affiliations

  1. Department of Mathematics and Physics, Faculty of Military Technology, University of Defence, Brno, Czech Republic

    Šárka Hošková-Mayerová

  2. Department of Business Administration, University “G. d’Annunzio” of Chieti-Pescara, Pescara, Italy

    Fabrizio Maturo

  3. Systems Research Institute, Polish Academy of Sciences, Warsaw, Poland

    Janusz Kacprzyk

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Maturo, F., Migliori, S., Paolone, F. (2017). Do Institutional or Foreign Shareholders Influence National Board Diversity? Assessing Board Diversity Through Functional Data Analysis. In: Hošková-Mayerová, Š., Maturo, F., Kacprzyk, J. (eds) Mathematical-Statistical Models and Qualitative Theories for Economic and Social Sciences. Studies in Systems, Decision and Control, vol 104. Springer, Cham. https://doi.org/10.1007/978-3-319-54819-7_14

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