Abstract:
Purpose of the study: The study is focused to investigate the impact of board diversity on firm performance through board
meetings based on listed manufacturing companies listed at the Colombo Stock Exchange in Sri Lanka.
Methodology: Bio-demographic diversity of Board measured by gender, age and race, and job-related diversity measured on
functional, education and organizational tenure. Firm performance measured through Tobin Q and Return on Sales. The
number of board meetings conducted per year was taken as a mediating variable. Listed manufacturing companies at
Colombo Stock Exchange from 1985 to 2019 were the population from which twenty-eight firms that have been operating
from 2013 to 2017 were filtered as the sample. Required data was collected by annual reports, published financial
documents, and on which gender index, age index, race index, functional index, education index, and organization tenure
index were calculated separately. Multiple regression analysis was used to measure the direct and indirect impact of board
diversities on firm performance.
Main findings: The regression result indicated a significant positive impact of gender diversity on firm performance;
however age and race diversities had an insignificant impact. Further, the impacts of functional, education and organizational
tenure diversities to firm performance were negative. Finally, the study found a significant indirect impact of biodemographic and job-related diversities on firm performance through board meetings confirming the mediating effect of the
board meeting.
Implications: Policymakers and authorizes listed manufacturing firms should identify the escalating trend of women
participation, educational improvement in the director board and ought to take necessary actions to maintain appropriate
diversity levels in terms of bio demographic and job-related to enhance the firm performance.
The novelty of the study: There is a lack of research literature discussing the impact of board diversity on firm performance
with the mediating effect of the board meeting.
