Social Diversity on Corporate Boards in a Country Torn by Civil War

We examine how social diversity and inclusiveness in corporate boards affect corporate performance and monitoring in Sri Lanka, a country subject to decades of polarization, civil war, and even genocide. Barely a decade after the civil war, we find that board social diversity on the basis of ethnicity, language, religion, and gender of the board members is positively related to corporate performance, both in terms of stock market performance and accounting returns, and to corporate financial stability. We find no evidence that inter-personal conflicts or communication problems among board members negatively affect firm performance.