Fernando Lima Trambacos
Doctorate – The relation between diversity in companies’ board of directors and c-level executives and share returns
Advisor: Prof. Dr. Luiz Nelson Guedes de Carvalho
Comission: Profs. Drs. Fernando Dal-Ri Murcia, Ricardo Goulart Serra and Elionor Farah Jreige Weffort
Link YouTube: https://youtu.be/rMkqftOwhHY
This research has the objective of investigating the way how diversity of individual characteristics of board members and C-level executives of Brazilian public companies relate to their share returns, taking into consideration the discussions involving the impacts of group dynamics on corporate governance. It is argued that a higher diversity level in these bodies should be positively related to share returns due to both (i) the mitigation of the negative effects related to groupthink and the formation of social networks and (ii) to the stimulation of cognitive conflicts, contributing to better decision making, monitoring improvement monitoring and an incentive to the generation of investment opportunities. Two studies are made for this analysis, contemplating six alternative diversity indicators, calculated with the information of two complementary data bases: (i) a panel data base, containing superficial data for all Brazilian public companies for the period between 2011 and 2018; and (ii) a cross-section data base, containing deeper level information for the 64 companies included in the IBOVESPA index on December 31, 2017. Pursuant to the empirical analysis, it is possible to argue that the studies bring evidence that a positive relation between diversity of board members and higher share returns indeed exists and that this relation is established both directly and intermediated through a better monitoring and an incentive to the generation of investment opportunities. This conclusion is clearer in the empirical models based on the diversity indicators which contemplate deeper aspects of this phenomenon and when it is understood that environments of collegiate decision making are more prone to channel the positive effects of diversity over share returns. When the models for the C-level executives are analyzed, however, the results are less evident in all scenarios. It is argued that this deviant behavior is a consequence of the functional and structural characteristics of this body, which are less prone to channel the positive effects related to diversity over share returns.
*Abstract provided by the author