Board Diversity and Corporate Performance: A Romanian Case Study

We analyse the influence of Corporate Governance, as measured by diversity in terms of age, gender, and independence, on the financial performance of the Romanian corporates. Romanian directors have an average age of 52 years and the average age range within the boards is 25 years. Analysis confirms that age, both as a board characteristic and as a measure of separation, has a non-linear influence on financial performance. Performance is obtained when directors are in their early 50s and the age dispersion is moderate. The boards are generally not gender diversified, with the average weight of female directors at 15%. Analysis links gender diversification with lower performance, while where diversification occurs, a non-linear correlation is observed. In this case, performance is associated with moderate gender diversity. Independent directors occupy on average 51% of the board seats. We found that a higher number of independent directors has a negative influence on performance and that introducing one or two independent directors has a consistent positive result. The results for Romanian companies are generally consistent with the literature review.