The relationship between board diversity and financial performance of publicly listed companies in South Africa

Abstract

This research sets out to investigate the links between corporate governance, cognitive diversity among board members and company financial performance of publicly listed companies on the JSE. The purpose is to establish if there is a relationship between cognitive diversity among board members and company financial performance. It follows a quantitative design using secondary data. Simple random sampling was applied and resulted in a sample of 122 companies. Through statistical analyses, the research found that there was a negative relationship between cognitive diversity among board members and company financial performance. The implication for management is that measures should be instituted to mitigate the negative effects of diversity to reap the benefits in terms of creativity and innovation that diversity fosters. The research contributes to the body of literature concerned with diversity and board composition.