Board diversity improves corporate performance: study – Bankless Times

Board diversity improves corporate performance: study When picking a board of directors, shareholders naturally seek individuals with the best pedigrees—those who attended the best schools and worked at prestigious companies. But it turns out that this strategy can backfire when members of the board share similar backgrounds. In a first-of-its-kind study, a researcher at the University of Missouri has found that boards of directors with shared education, employment history and family background are correlated with several negative characteristics, including lower market values and more frequent financial misrepresentation. “Other studies have looked at the ties between boards and CEOs, but I wanted to see how the internal ties between directors might influence their decision making,” said Matthew Souther, an assistant professor of finance at MU’s Robert J. Trulaske, Sr. College of Business. “I found that shareholders are ultimately the ones to bear the cost of a closely connected board.”