The Importance of Board Diversity : Measured by Tobin’s Q

This paper examines the relationship between firm performance, measured by Tobin’s Q, and board diversity. Board diversity is measured by age differentials, gender diversity, board size, number of board members with higher education, and number of nationali-ties included in the board. The data were collected from firms on the OMX Stockholm 30, for the years 2006-2010. Because data were collected from 5 years, a panel type re-gression is used. Furthermore the regression of this paper corrects for time specific ef-fects. This paper contributes to the field of research by investigating the Swedish market in a quantitative manner and using these specific five explanatory variables as a measure of board diversity. The result of this paper shows a clear overall relationship between board diversity and firm performance. More specifically, the education and nationality variables are not significant. The size variable is significant and negatively correlated to firm performance, while the gender and age variables show a significant and positive re-lationship to firm performance