Do Differences in Directors Make a Difference? Evidence from Vietnam

Using a multidimensional index of board members’ diversity, we document a positive impact of board diversity on firm performance, for a panel of Vietnamese listed firms. Results are robust to the introduction of firm fixed effects, the use of an instrumental variable and changes in the board diversity measure. The positive impact of board heterogeneity on performance is mitigated for high risk or high complexity firms, when the chairman has a dominant position in the firm and in state-controlled firms, which are very prevalent in Vietnam. Finally, we document that the results are driven by the diversity of blockholders sitting on the board, whereas the diversity of directors acting as executives has no impact. Overall, our results suggest that board diversity carries benefits not only in countries with advanced corporate governance standards but also when they are in their infancy