Board diversity and stock return volatility of firms in France
This study analyzes the impact of director heterogeneity on stock return volatility of public companies in France. Empirically, diversity and each of its components, except age, reduce this volatility. This phenomenon is explained by a less risky and more persistent financing policy adopted by diverse boards. The moderating effect of board diversity on firm risk increases with the growth opportunities. Diversity makes it possible to compensate for the lack of manager’s supervision resulting from a too low proportion of independent directors. On the other hand, it increases the stock return volatility of the most innovative firms.