Board demographic diversity, institutional context and corporate philanthropic giving

Abstract

Research findings generally suggest that board diversity has an effect on performance, be it social or financial, but there is uncertainty as to the strength and direction of the effect. In this study, we respond to two questions: (1) Do differences in the diversity of board demographic characteristics have an effect on Corporate Philanthropic Giving (CPG)? Does the institutional context affect such a relationship? We use a sample of all listed non-financial Chinese firms from 2010 to 2014. Our findings confirm that corporate giving is indeed related to gender, age, tenure, functional and foreign experience diversity. More importantly, the relationships are significantly moderated by the institutional context, as measured by the governance regime and the level of market development. This paper contributes convincing empirical evidence that within-board demographic diversity characteristics, controlled by board structural characteristics, have a clear effect on corporate giving, and that this effect is affected by the institutional context. This in turn should facilitate responding to a wider set of stakeholders’ needs and issues. Each of these findings is a contribution to theory and have important implications for research on corporate social responsibility, or corporate governance, and for managing board composition.