Do differences in directors make a difference? Evidence from a transitional economy

Abstract

This study investigates the relationship between director diversity and firm performance in Vietnam. Using a comprehensive index encompassing the director’s demographic and cognitive attributes, we document a positive association between board diversity and firm performance. We also observe that the benefit is less pronounced in firms facing greater complexity and risk, higher state ownership, and the presence of powerful directors. Breaking the boardroom by director types, we find that only the diversity of block-holder directors improves firm performance. The results suggest that board diversity yields benefit not only in countries with advanced corporate governance standards but also in transitional economies like Vietnam.