Does board diversity reduce the probability of financial distress? Evidence from Chinese firms

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F62690094%3A18450%2F22%3A50019510" target="_blank" >RIV/62690094:18450/22:50019510 - isvavai.cz</a>

Result on the web

<a href="https://www.frontiersin.org/articles/10.3389/fpsyg.2022.976345/full" target="_blank" >https://www.frontiersin.org/articles/10.3389/fpsyg.2022.976345/full</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.3389/fpsyg.2022.976345" target="_blank" >10.3389/fpsyg.2022.976345</a>

Result language

angličtina

Original language name

Does board diversity reduce the probability of financial distress? Evidence from Chinese firms

Original language description

This paper empirically investigates the impact of cognitive board diversity in education, expertise, and tenure facets on financial distress likelihood in the emerging economy of China. This study examines how this relationship varies across State-Owned Enterprises (SOEs) and Non-State-Owned Enterprises (NSOEs). Paper argues that the Chinese stock market, as a typical emerging market, is an excellent laboratory for studying the impact of board diversity on the probability of financial distress. Its underdeveloped financial system and inadequate investor protection leave firms unprotected from financial hardship. A sample of 12,366 observations from 1,374 firms from 2010 to 2018 shows that cognitive diversity qualities are positively linked with Z-score, implying that directors with different educational backgrounds, financial skills, and tenures can assist in reducing the probability of financial distress. Cognitive board diversity reduces the likelihood of financial distress in SOEs and NSOEs. However, tenure diversity is insignificant in all cases. Furthermore, the robustness model &quot;two-step system Generalized Methods of Moments (GMM)&quot; demonstrated a positive association between educational diversity, financial expertise, and financial distress scores. The results have significant implications for researchers, managers, investors, regulators, and policymakers.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50103 - Cognitive sciences

Project

—

Continuities

S - Specificky vyzkum na vysokych skolach

Publication year

2022

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Frontiers in psychology

ISSN

1664-1078

e-ISSN

1664-1078

Volume of the periodical

13

Issue of the periodical within the volume

September

Country of publishing house

CH - SWITZERLAND

Number of pages

12

Pages from-to

"Article Number: 976345"

UT code for WoS article

000862427700001

EID of the result in the Scopus database

2-s2.0-85139195593