Corporate boards usually perform two roles: an advisory role to top management and a monitoring role on behalf of shareholders. The importance of board diversity has been shown both on the monitoring (agency theory) and in the advisory (resource dependence) side. Because diversity brings different viewpoints to the table, a diverse board can more effectively monitor executive behavior.
Board composition is influenced by both firm and country contexts. Industry type, firm size, age, and degree of internationalization as well as country industry structure, history, culture, and institutional strength are all critical to define board structure. In Germany we find union representatives as board members, in Japan ...
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