Gender and Ethnic Diversity in US Boardrooms: Is the Glass Ceiling Stifling Firm Financial Growth?

Gender and Ethnic Diversity in US Boardrooms: Is the Glass Ceiling Stifling Firm Financial Growth? by Dionne Roberts May 2017 Committee Chair: Dr. Subhashish Samaddar Major Academic Unit: Robinson College of Business The purpose of this research was to explore the relationship between diversity within the boards of directors of American companies and firm financial growth. Specifically, this study sought to determine the question of whether a relationship exists between medium-term growth in a firm’s accounting returns and the inclusion of a) minority women, b) ethnic minorities, or c) women on its board of directors. The supporting analysis for this inquiry included an in-depth examination of the five-year growth rates in ROE, ROA, and profit margins of 439 companies between 2011 and 2015. These companies operate across eight industry groups and are listed either on the New York Stock Exchange or the NASDAQ stock index. Results of the statistical analyses show significant increases in financial growth for companies with genderand ethnically-diverse boards (when compared to boards consisting solely of white men). However, based on effect sizes, the most significant increases were found in the profit margins of companies with minority directors.