Board diversity and corporate innovation: Evidence from Chinese listed firms

This study examines the association between board diversity, measured in both demographic characteristics (i.e., gender and age) and cognitive characteristics (i.e., educational background, expertise, tenure and breadth of board experience), and corporate innovation. Using a sample of Chinese listed firms and fixed-effect models, we find that cognitive diversity, especially in attributes of educational background and expertise, is positively associated with corporate innovation. This is predominantly due to the incremental diversity added by executive directors and depends on demographic diversity. We further find that hi-tech talent introduction and incentive are two channels through which board diversity affects corporate innovation. The results are robust to the use of alternative measures of corporate innovation, two stage-least square models by employing two demand-based instrumental variables for board diversity, and normalized diversity indexes.