Who's on board? Influence of diversity and network of Thai boards of directors on firm value

Using a large sample analysis of Thai listed firms, we address an important question. Do board diversity and network add value to firms? This article extends the debate on the benefits and costs of board diversity and network and their effect on the broader picture of corporate governance. The sample period straddles 2001 to 2005, which allows us to examine board characteristics in response to the Asian financial crisis. We find that diversity in age and study majors are positively related to Tobins Q ratio, while diversity in educational levels leads to lower firm value. Our results suggest that boards with diverse age groups and study areas might generate useful advice and complement each other; however, those with diverse educational levels might create costs due to possible conflicts and a lack of coordination and communication. In addition, the results show that alumni networks have a positive effect on Tobins Q ratio. The findings further suggest that board networks could bring benefits to firms. An alumni network is significant to firms because it could help firms obtain external resources. It also provides significant findings for policy makers to design best practices of directors in emerging countries.