Title: Can board diversity and choice of auditor enhance profitability?

Authors: Duarte Pitta Ferraz; Ilídio Tomás Lopes; Ardit Kopliku

Addresses: Nova School of Business and Economics, Universidade Nova de Lisboa, Campus de Campolide, 1099-032 Lisbon, Portugal ' Business Research Unit (BRU-IUL), Instituto Universitário de Lisboa (ISCTE-IUL), Av. das Forças Armadas, 1649-026, Lisbon, Portugal ' Nova School of Business and Economics, Universidade Nova de Lisboa, Campus de Campolide, 1099-032 Lisbon, Portugal

Abstract: The research examines how board diversity and choice of auditing firm, as mechanisms of corporate governance, affect the profitability of Iberian companies. Using information from an adjusted sample of 93 non-financial companies listed on the Iberian stock exchanges, a theoretical model was regressed. Profit margin (PM) and return on equity (ROE), as two of the more frequently used profitability measures, capture, at a moderately acceptable level, the impact derived from board diversity and choice of auditing firm among Iberian companies. Most variables cited are not equally distributed across Iberia, in line with Hofstede's cultural dimensions model. The evidence, while inconclusive, provides valuable insight into how governance mechanisms affect performance. In addition, the research provides value to the literature by introducing new proxies on board characteristics, and its impact on dynamic profitability.

Keywords: board diversity; auditing firms; profitability; assets turnover; Iberia; Portugal; Spain.

DOI: 10.1504/IJBPM.2018.092757

International Journal of Business Performance Management, 2018 Vol.19 No.3, pp.289 - 306

Received: 01 Feb 2016
Accepted: 27 Dec 2016

Published online: 29 Jun 2018 *

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