Seminario Monday Nweke Igwe

Monday Nweke Igwe (Alex Ekwueme Federal University) will present his paper “Ethnic diversity on corporate boards and information asymmetry: The moderating role of foreign directors.”

Abstract

Given the mixed evidence regarding the economic benefit of board ethnic diversity (BED), our study seeks to contribute to this debate by examining the impact of BED on information asymmetry in the stock market of emerging countries and the moderating role of foreign directors. Using a sample of listed firms from Sub-Saharan African countries and employing robust econometric modeling that addresses endogeneity concerns, we find that greater ethnic diversity on corporate boards is negatively associated with information asymmetry in the equity market. Additionally, our results indicate that ethnically diverse directors play a more efficient role in mitigating information asymmetry for firms operating in countries with weak external governance mechanisms. Contrary to our expectations, we find that the presence of foreign directors in boardrooms does not strengthen the relationship between ethnically diverse directors and information asymmetry. Overall, our findings highlight the importance of BED in improving firm transparency of information and maintaining investors’ confidence, particularly in weak regulatory environments.