Management Accounting Section Midyear Meeting

Can Board Gender Diversity Improve Corporate Culture? Evidence from U.S. State-Level Board Gender Diversity Interventions

• In Event: Top Management Culture

Abstract

In this study, we examine the following research question: Does teamwork culture moderate the relation between top management team demographic diversity (“TMT diversity”) and firm performance? Recent years have seen increasing calls for TMT diversity, but prior literature provides mixed evidence on the performance effect of TMT diversity. While TMT diversity can potentially generate benefits, it could also increase coordination costs. Building on theory in prior literature, we predict that teamwork culture mitigates the increased coordination costs associated with TMT diversity and hence positively moderates the relation between TMT diversity and firm performance. We find results consistent with our prediction. Furthermore, cross-sectional analyses suggest that the positive moderating effect of teamwork culture is more pronounced when coordination costs are higher (proxied by shorter CEO tenure and TMT change). Our results are robust to alternative measures of TMT diversity and teamwork culture. We contribute to an emerging accounting literature on diversity, equity, and inclusion by demonstrating the important role of teamwork culture in unlocking the full benefits of TMT diversity.

Authors

• Dave (Young Il) Baik, University of Illinois at Urbana-Champaign

• Xiaoling Chen, University of Illinois at Urbana-Champaign

• Fei Du, University of Illinois at Urbana-Champaign