Corporate governance and board composition: diversity and independence of Finnish boards

The board of directors play an important role in representing the owners of the company and work for their interests. Other stakeholders must also be taken into account. Nowadays research in the corporate governance field has become increasingly focused on what kind of directors are elected to the board of directors and for what matters to the election. Because the stereotype of a board member is a male at the end of the career, researchers are interested in what factors have an impact on the transformation of that homogeneous composition. This study is to examine whether industry type, board size, and shareholder concentration have an impact on board diversity and independence. The variables to be studied are gender, age and independence of board of directors. The sample of study are the top 80 Finnish listed companies by market capitalization at the end of 2016. The study is based on a research conducted in Australia (Kang et al. 2007) with regard to top 100 Australian listed companies. The research data was collected from companies’ websites and from Orbis database. The validity of the hypotheses presented in the study is tested by regression analysis. Several descriptive statistics are also performed on the research data. According to study results, especially shareholder concentration has an impact on board diversity and independence. Lower shareholder concentration has a statistically significant and positive impact on gender diversity and independence of board members. However, contrary to the hypothesis, the age diversity is significantly and negatively associated with lower shareholder concentration. Unexpectedly, there is no statistically significant association between industry type, and the diversity and independence of the board of directors. The results can be interpreted in such a way that companies seek to comply recommendations of Finnish corporate governance code on diversity and independence of board of directors, and the impact of company and board features is lower. There are still room for improvements. The study offers also other interpretations of the results