COUNSEL 20 Lecture Notes - Lecture 1: Group Dynamics
Document Summary
Van peteghem et al (2018): beyond diversity: a table of faultlines and frictions in the board of directors. Empirical evident does not uniformly support the idea that greater board diversity always results in better performance. Board performance includes firm performance, ceo turnover-performance sensitivity, and abnormal ceo compensation. Stronger faultlines are negatively associated with board performance, implying that a more balanced distribution of directory diversity characteristics across board members may help to maximize the benefits of board diversity. According to the agency theory, diversity in the board allows it to fulfill its monitoring role. From a resource-based view, diversity in board composition increases the board"s resource pool by providing important knowledge, assets, guidance, and connections. The extent wo which board diversity translates into board effectiveness is largely dependent on group dynamics within the board. Group diversity can decrease performance through: greater internal conflicts, larger coordination and communication costs.
