Board Diversity and Firm Performance : The Role of Contextual Variables

We examine the dynamic relationship between board diversity and firm performance in an Indian context using a systems generalized method of moments and control function approach. Our baseline analysis shows that board diversity positively influences accounting performance but negatively affects market performance. Additional analysis reveals that contextual variables, including board independence, firm size, firm age, promoter shareholdings, industry sector, women’s participation in STEM education and the workforce and gross domestic product moderate this relationship significantly. We also find improved market performance after enacting the Companies Act 2013. Overall, these results highlight the critical role of performance measurement and contextual variables in the diversity–performance nexus