Meta-Analytic Review of the Relation between Board Globalization and Firm Performance

Following the corporate governance scandals such as Enron, WorldCom, and Vivendi, the special attention has been attached to the board composition, and different dimensions related to board diversity has been discussed in this context. Recently, the interest in the board of directors' diversity has shifted to the globalization of boards, and the number of studies that investigates the relation between foreign board members and firm financial performance has increased. However, these studies report contradictory results, therefore the current study aims to reconcile these conflicting results. In response to these results, meta-analyses have been conducted by using the results obtained from 21 individual studies. The results show that the relation between foreign board representation and general firm financial performance is positive, however, the effect size for this relation is small. Similarly, there is a positive relation between foreign board representation and accounting-based firm performance. By contrast, the analysis has found that there is no statistically significant relation between foreign board representation and market-based firm performance. Overall, the results suggest that although foreign board representation does not lead large-scale increase in the firm financial performance, the impact is still positive. Even though the study has several limitations, the findings might assist the executives, shareholders, regulators, and researchers