Board Committee Diversity and Corporate Investment Behaviour

Board Committee Diversity and Corporate Investment Behaviour | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Article Board Committee Diversity and Corporate Investment Behaviour Adam Arian, Lynette Daff, James (Chung-Chieh) Li, John Sands, and 1 more This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-6597429/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study examines how diversifying board committees influence corporate investment behavior, specifically in decision-making and allocation strategies. By committee presence, size, gender representation, and independent and non-executive members, we build a detailed diversity index using data on these committees. Our findings show that higher diversity substantially enhances the quality of long-term strategic investment decisions compared to short-term operational efficiencies. Additional investigations have shown that more diversity maximizes corporate resource allocation, generating optimal investment and investment efficiency levels. These findings highlight the strategic importance of diversity as a contributor to good governance and better financial performance. Business and commerce/Business and management Social science/Finance 1. Introduction The movement towards corporate board diversity to create more inclusive and effective decision-making mechanisms is increasingly shaping the debates in corporate governance (Rao & Tilt, 2016 ). Cross-disciplinary accounting research combines different fields of study to understand better the main components (Dellaportas et al., 2022 ). Although many studies have investigated how gender diversity on corporate boards impacts financial performance, the results are mixed and often inconclusive (Gordini & Rancati, 2017 ). This indicates further studies are needed to identify the possible causes of these mixed results. One important gap in the research is the lack of focus on the overall impact of diversity within board committees compared to executive board diversity. Committees develop and present crucial strategic recommendations to the board. Past research findings have emphasized the importance of moving research beyond mere numerical diversity representation so that a more comprehensive understanding of how committee diversity influences corporate operations, both within the governance mechanism and firms' profitability (Green & Homroy, 2018 ). Building on this idea, Singhania et al. ( 2022 ) found that diversity within remuneration and nomination committees can boost financial performance, showing the significant impact of these sub-groups on corporate decisions. However, their study was limited to only these two key strategic board committees, aligning with the limited prior research on their diversity. Using the theoretical framework of agency theory, which supports board committee diversity in managing agency conflicts and improving corporate decision-making, our study investigates how diverse viewpoints within these sub-committees help businesses monitor and direct management teams in aligning the interests of shareholders and executives (Adams & Ferreira, 2009 ; Jensen & Meckling, 1976 ). The diverse viewpoints in the boardroom facilitate decision-making and recommend required mechanisms for corporations to navigate complex investment opportunities (Hillman et al., 2000 ). More recently, board gender diversity and reducing investment inefficiency have been studied (Baik et al., 2024 ; Farooq et al., 2023 ). Although substantial research on the impact of board diversity on various aspects of organizational performance, including investment efficiency, the precise influence of diversity within board committees on investment efficiency has not been extensively studied. Our study seeks to fill this gap by examining how diverse compositions within board committees affect corporate investment behavior, decision-making, and investment efficiency 1 . We aim to determine whether diverse perspectives within these committees result in more effective investment outcomes. Our research focuses on corporate investment behavior and decision-making, which are crucial to a firm's financial health (Gomariz & Ballesta, 2014 ). Various measures of corporate investment behavior and outcomes are used to explore how diversity across board committees might influence strategic investment choices, including how well these choices align with optimal investment levels (McNichols & Stubben, 2008 ). By investigating the strategic role of overall committees’ diversity, our study enhances the understanding of how it can either bolster or hinder effective investment decision-making. This focus contributes to the importance of committee diversity in underscoring strategic corporate governance and an understanding of factors contributing to optimizing financial performance. We collected data on variables affecting our diversity measure, specifically from strategic committees such as sustainability, audit, nomination, executive board, risk, and remuneration, of firms listed on the ASX 300 from 2018 to 2020. Our assessment focused on several aspects of diversity, including the presence of these committees, their size, gender representation, and the proportions of independent and non-executive members. Our findings reveal that greater diversity within board committees significantly enhances the quality of corporate investment decision-making, particularly in long-term strategic areas. The findings indicate that while the benefits of board committees' diversity are apparent across various investment metrics, they are most substantial in decisions that shape strategic, long-term investments rather than short-term operational efficiencies. Additionally, our extended analysis shows how different viewpoints contribute to investment decision-making and improve resource allocation and investment efficiency. This analysis highlights the important role of diversity in improving board-level governance and enhancing financial outcomes, providing valuable insights for establishing a robust corporate governance structure. Our findings remain consistent after performing different tests, such as using different measures of corporate investment behavior and endogeneity tests. We are not claiming that we fully address potential endogeneity issues, but performing an instrumental variable (IV) method to address this important concern while removing it can be challenging. Our findings advance the understanding of corporate governance and its influence on corporate investment behavior. It also provides evidence that board committee diversity improves both decision-making quality and financial return through the choice of strategic investment opportunities. This study highlights the influence of committee diversity on long-term strategic decisions versus short-term operational efficiencies, which is an important viewpoint on how it can be leveraged within corporate governance. Furthermore, our findings provide practical insights into organizations, suggesting that incorporating diverse viewpoints within committees can lead to more strategic decision-making, particularly in corporate investment strategies. This article follows with the next section by providing a literature review, theoretical background, and development of hypotheses. It then continues with research design, empirical findings, and robustness analysis. The conclusion presents the discussion and implications of the findings. 2. Review of literature and development of hypotheses Agency theory provides a useful framework for investigating how diversity within corporate board committees influences investment behavior (Jensen & Meckling, 1976 ). According to agency theory, one of the primary roles of corporate boards is to oversee management, a task that can be strengthened by greater diversity among board members (Ararat et al., 2015 ). While directors serve on various board committees, the composition of these committees varies, suggesting that diversity at the board level might naturally extend to the committee level. However, each committee's diversity level may differ based on its specific characteristics and requirements. Research has identified several factors that shape the diversity of board committees, noting that a significant amount of decision-making occurs at the committee level (Ellstrand et al., 1999 , p. 67). Adams et al. ( 2018 ) emphasize that directors are multifaceted and argue that regulatory disclosures should include specific characteristics such as experience, qualifications, attributes, and skills as part of board diversity. Klein ( 1998 ) found that committee experience is positively linked to higher stock returns and investment performance. Diversity is often associated with experienced, skilled, non-executive (outside) directors who bring greater independence to decision-making, leading to more informed choices (Sarkar & Selarka, 2021 ). It also reduces the risk of decisions being dominated by a few board members, adding a broader range of skills, leadership styles, values, and networks. Additionally, higher diversity can reduce a company's reliance on external conditions and improve its resilience and adaptability (Nicolò et al., 2022 ). The size of board committees is also an important characteristic to consider when assessing diversity (Altin, 2024 ). Gender diversity has similarly been recognized as a key component of committee diversity (Khan et al., 2020). The existence of specific committees, some of which are voluntary while others are mandated by the ASX recommendations or the Corporations Act (2001) in Australia, also plays a role in determining the impact of committee diversity. This study includes other committees acknowledging that their presence or absence affects the overall diversity and, consequently, the impact on corporate outcomes. From the agency theory perspective, this study hypothesizes that diversity within board committees enhances corporate investment decisions and performance outcomes. 2.1. Diversity in board committees and corporate performance Board committees are crucial in corporate governance, monitoring, and consulting tasks (Bugeja et al., 2016 ). They provide several benefits, including decentralized strategic decision-making, efficient role distributions, expertise, improved board accountability, and reduced agency conflicts through proper supervision, leadership separation, and monitoring responsibilities (Berezinets et al., 2017 ). The diversity within nomination committees enhances discussions, as members are more likely to select capable directors who can significantly contribute to the company’s economic success (Kahane et al., 2013 ). The following sub-sections will describe various characteristics of board committee diversity—such as size, experience of independent directors, the influence of non-executive directors’ independence, and gender diversity—and explore their impact on corporate performance, particularly in terms of investment and financial outcomes. Committee size diversity and corporate performance Research has shown conflicting findings regarding the relationship between audit committee size and firm performance. Altin ( 2024 ) conducted a meta-analysis of 39 previous studies and found a significant positive relationship between audit committee size and firm performance in both developed and developing countries. Smaller audit committees, particularly those with more experience and financial expertise, were more likely to be associated with positive firm performance (Aldamen et al., 2012 ). However, Al-Matari et al. ( 2014 ) reported that while audit committee size has an insignificant positive relationship with firm value, larger committees may lead to poorer performance, as agency theory suggests. In contrast, Fariha et al. ( 2022 ) found a significant and positive relationship between audit committee size and firm performance. These mixed results and the potential agency problems associated with committee size indicate that further investigation is necessary. Therefore, committee size diversity is included as a component of board diversity in the current study. Experienced independence directors and corporate performance Current regulations do not specify requirements for the diversity components of board committees. Although research highlights the importance of directors' expertise (Dass et al., 2014 ; Faleye et al., 2018 ), there is limited evidence on how directors with specific skills are assigned to the appropriate committees. Altin ( 2024 ) examined 39 previous studies, revealing a significant positive relationship between audit committee industry expertise and firms' financial performance. Similarly, Das et al. ( 2022 ) found a positive market reaction when directors with financial expertise joined audit committees, emphasizing the importance of aligning directors' skills with committee requirements. In addition to the expertise and experience of independent directors, their high level of independence is another crucial characteristic (Mohid Rahmat et al., 2009 ) which will be discussed further in the next sub-section. These findings highlight the importance of studying the experience of external directors as a key component of board committee diversity. Non-executive directors and corporate performance Beavers and Mobbs ( 2020 ) argue that the presence of a CEO on a nomination committee is associated with a reduced rate of independent director appointments. In contrast, Guo and Masulis ( 2015 ) found that firms with fully independent nomination committees composed entirely of non-executive directors show a stronger correlation between CEO turnover and firm performance. These findings underscore the importance of non-executive directors' independence in influencing nomination committees. Poretti et al. ( 2018 ) also found that the independence of audit committees impacts the timing of earnings announcements. The significance of non-executive directors is further highlighted by the requirement in some jurisdictions for audit committees to be composed of at least two-thirds non-executive directors, owing to their level of independence. Research shows that the independence of audit committees positively affects firm performance in both developed (Khanchel, 2007 ) and developing countries (Altin, 2024 ). Additionally, the requirement for remuneration committees to include non-executive directors is seen as a response to agency problems (Klein, 1998 ). Separate risk committees, composed of non-executive directors, have been found to enhance company value and improve performance compared to firms without such committees (Ghazieh & Chebana, 2021 ; Jia & Bradbury, 2021 ). Kallamu ( 2015 ) found that risk management committees with non-executive directors positively impact firms' market valuation and investment. Similarly, Malik et al. ( 2020 ) report that effective risk committees are significantly and positively associated with firm performance. Ugwu et al. ( 2021 ) reveal that it significantly improves financial performance when most non-executive directors are on the risk management committee. Therefore, these findings support the inclusion of non-executive directors as a component of board committee diversity. Gender diversity and corporate performance The literature examines how gender diversity on corporate boards impacts company values and productivity. Earlier research indicated that between 1992 and 1997, more women joined the workforce, but the increase in women holding executive positions was not as substantial (Black & Juhn, 2000 ). Becker ( 2010 ) argues that underrepresenting women in executive roles may reflect a systematic bias against gender diversity in board appointments, potentially placing companies at a competitive disadvantage. This bias against gender diversity in board roles may also extend to board committees, which can similarly disadvantage companies. Sheerin and Garavan ( 2022 ) noted a lack of evidence regarding whether female directors operate heterogeneously in their decision-making rather than being part of a homogeneous group. They suggested that the diverse norms of female leaders can complement those of their male counterparts (Clavijo & Perray-Redslob, 2024 ). On the other hand, it has been argued that female directors on committees can enhance governance quality and contribute to the benefits of diversity on corporate boards (Green & Homroy, 2018 ; Kakabadse et al., 2015 ). Including female directors can lead to more thorough analyses in complex situations, potentially resulting in a more cautious approach that improves financial performance. Gender diversity in board committees can also foster discussions where members are more likely to select capable directors who contribute significantly to the company’s economic success (Kahane et al., 2013 ). Ararat and Yurtoglu ( 2021 ) found that including female directors in board committees positively impacts corporate valuation. Some studies suggest that having a mix of genders in executive roles can improve oversight and overall corporate performance (Ali, 2016 ; Joecks et al., 2013 ). Joecks et al. ( 2013 ) provide evidence of a U-shaped relationship between gender diversity and performance among German companies, indicating that the benefits of gender diversity increase as it grows. Michaelidou and Moraes ( 2017 ) also found that organizations with more female directors experience lower information asymmetry and improved corporate performance. The consensus appears to be that higher gender diversity is beneficial for organizations, as it leads to the inclusion of more capable women in place of male members (Kahane et al., 2013 ). However, research on the impact of female representation on corporate performance yields mixed results. Some studies (e.g., Gregory-Smith et al. ( 2014 ); Pletzer et al. ( 2015 ); and Post and Byron ( 2015 )) suggest that the gender composition of directors may have little or even negative impact on corporate outcomes. Conversely, others argue that female directors on boards are associated with higher equity price informativeness and improved quality of corporate disclosure (Gao, 2018 ; Gul et al., 2011 ). Additionally, Khemakhem et al. ( 2022 ) and Berle et al. ( 2022 ) also show that the benefits of gender diversity extend beyond the board to specialized committees, enhancing decision-making. Garanina and Muravyev ( 2021 ) argue that to realize the full benefits of diversity on boards, women must hold positions that influence corporate decisions. While numerous studies have explored the relationship between gender diversity on boards and financial performance, the findings often point to symbolic inclusion rather than directly influencing performance (Chang et al., 2019 ; Green & Homroy, 2018 ). If female directors are appointed mainly for regulatory compliance, their inclusion in committees is more likely when there are clear benefits to the committee's operations. The benefits of gender diversity identified in previous studies support including this variable as a component of board committee diversity. Investigating the impact of diversity within board committees on investment behavior is crucial. A mix of gender, skills, expertise, and backgrounds enhances decision-making, leading to more comprehensive evaluations of investment opportunities and associated risks (Bernile et al., 2018 ). Diversity broadens corporate discussions, vital for assessing complex investment situations and improving outcomes. Informed decision-making, strategic goals, and specialized board committees can significantly impact corporate financial outcomes through enhanced investment decisions. Therefore, this study proposes the following hypothesis: H1: There is a positive relationship between corporate board committees’ diversity and corporate investment outcomes. 3. Research design 3.1. Variables measurement Several characteristics are identified and used to operationalize and reflect the complexity of board committee diversity, the independent variable used to test the hypothesis. The dependent variable, corporate investment decisions, relies on a primary measure of corporate investment efficiency used in prior studies. These measures are discussed in the following two sub-sections. Diversity of board committees This research examines the association between corporate governance and corporate investment behavior, concentrating on the important role of diversity within board committees. Particularly, we examine the complexity of diversity within corporate board committees. We evaluate different characteristics of diversity, including their existence, the size of committees, female representation, and the presence of independent and non-executive board members. These characteristics help construct an inclusive view of diversity beyond gender-centered measures. Despite the mixed findings of the research on the influence of corporate board gender diversity on financial performance (Carter et al., 2010 ), there are still unanswered questions about the qualitative impacts of diverse viewpoints on the effectiveness of board committees. The existing research gap calls for more studies on how diversity in board committees influences corporate operations. Recent studies have recognized the importance of evaluating diversity within executive boards and key strategic committees (Khemakhem et al., 2022 ). Specifically, adding females to these key strategic committees affects corporate disclosure, operations, governance, and potential investment choices and outcomes. We attempt to create a measure of board committee diversity that covers these aspects to show its broad influence on organizational decision choices and investment results. We introduce the diversity index (BCs_Diversity) to evaluate diversity across main strategic committees, such as sustainability, nomination, audit, executive, risk, and remuneration committees for ASX 300 in the Australian equity market. We selected these committees due to their common appearance across the sample firms, which recommends a consistent basis for our evaluations. The data for our index is collected manually, ensuring its robustness and consistent basis for examining how the diversity of committees affects corporate investment behavior. Our index evaluates board committees based on five key elements of diversity. First, it assesses whether the committee exists because some committees are voluntary and assigns a score of 0 for absence and 1 for presence. Next, it considers the committee size, applying a normalized measure that ranges from 0 to 1 based on the number of members. The index also looks at gender diversity, specifically the presence of at least one female member on the committee. Additionally, it evaluates the presence of independent members within the committee. Finally, the index considers the role of executive members, particularly the presence of non-executive members. Our measure, inspired by Carter et al. ( 2010 ), emphasizes crucial elements such as independence and non-executive membership. This approach helps us better understand board diversity and its impact on financial outcomes. Our approach in this study seeks to offer an inclusive perspective on committee diversity, treating each element equally in alignment with our research objectives. We calculate the diversity score by assessing each criterion, and the overall diversity score is determined by averaging these individual scores. Following the methods outlined in prior literature, we normalize the aggregated scores to a standard scale from 0 to 1 to enhance comparability, as Hair et al. (2006) suggested. Details about the construction of the index, the formulas used, and the normalization method are provided in Appendix A . Corporate investment decisions In line with previous research, this study focuses on Return on Invested Capital (ROIC) as the primary measure of corporate investment efficiency, as discussed by Durnev et al. ( 2004 ) and Mauboussin and Callahan ( 2014 ). ROIC measures how effectively a company generates returns from its investments. It uses net profit after tax as the numerator and total invested capital as the denominator. Therefore, it provides insight into corporate investment efficiency (Durnev et al., 2004 ). Additionally, following prior research by Jyoti and Khanna ( 2021 ), our analysis includes two other measures of corporate investment behavior: Return on Capital Employed (ROCE) and Return on Equity (ROE). ROCE recommends a broader assessment of profitability and capital allocation efficiency by using earnings before interest and tax (EBIT) and employing capital (equity and debt) as a denominator. This measure complements our first corporate investment efficiency (ROIC) measure by concentrating on the return from operational resources allocation after excluding short-term debts. Furthermore, as a main indicator of financial performance from an investor’s viewpoint, ROE concentrates on the return generated from shareholder’s equity. ROE directly measures how effectively a company utilise its equity financing to grow and generate economic outcomes. These three measures recommend an inclusive overview of investment behavior, from different viewpoints of operational efficiency to profitability performance and provide a robust understanding of corporate investment dynamics. A detailed measurement of our main investment variables is presented in Appendix A . 3.2. Sample selection and data For this study, we manually collect information on different elements if corporate board committees that are integral to our diversity index measurement. We capture this information from various sources such as corporate official disclosures, corporate websites, and other relevant disclosures. We combine this with financial and investment information collected through secondary data, including Bloomberg and Refinitiv databases. This study evaluates companies listed in ASX 300 in the Australian equity market from 2018 to 2020. Following prior literature, we include additional firm-level characteristics such as corporate executives’ average tenure (Exec_Ten) and board members’ average tenure (Board_Ten) (Ham et al., 2017 ; O'Reilly et al., 2018 ). Our analysis also includes other financial and investment-related variables impacting corporate investment decision-making. We include return on investment (ROA), a proxy for financial performance, Tobin’s Q (TQ) as a proxy for corporate investment attractiveness in the equity market, firm size (Size) and its market capital value (M_Cap), Property, Plant, and Equipment (PPE), Capital Expenditures (Capex), and cash ratios (Cash) which can potentially related or impact on the corporate investment behavior. We consider winsorization (to the first and 99th percentiles) across all continuous variables to address and maintain the impact of potential outliers in our analysis (Gholami et al., 2023 ). This method strengthens our analysis and helps us fully understand what impacts corporate investment decisions within the framework of the Australian equity market. Table 1 presents a detailed overview of how the study sample is selected and spread across various industries. Panel A shows how the sample was selected for 2018 to 2020, starting with 865 observations. After removing 142 observations due to the incomplete firm-level investment data and another 41 observations due to missing control variables, the final sample includes 682 observations. Panel B shows the final sample by industry sector. Materials is the largest represented sector in the sample, with 19%, Financials at 15%, and Consumer Discretionary at 12%. The Communications and Energy sectors comprise 4% of the total, while the Utilities sector represents only 2%, showing a broad yet varied representation across different sectors. Table 1 Sample selection and distribution Panel A: Sample selection Final observation Data coverage 2018–2020 865 Less: Observations dropped due to insufficient firm risk data 142 Less: Observations dropped due to insufficient control variables 41 Final sample 2018–2020 682 Panel B: Industry-base distribution of firms in sample Observations % Communications 24 4 Consumer discretionary 82 12 Consumer staples 41 6 Energy 24 4 Financials 102 15 Healthcare 57 8 Industrials 69 10 Information technology 59 9 Materials 132 19 Real-estate 78 11 Utilities 12 2 Total 682 100 Note: The table outlines the sample's distribution across various years and industry sectors. 3.3. Empirical models This section introduces the empirical models used to investigate the relationship between the diversity of board committees and investment efficiency. Recent research highlights the significant impact of gender diversity on corporate boards, especially concerning corporate strategic decision-making (Lai et al., 2023 ). The literature highlights that board gender diversity results in broader viewpoints and higher cooperation among board members, eventually improving decision-making quality. Following these insights, other studies emphasize the importance of diversity, not just in terms of gender but also across the strategic committees of the board (Green & Homroy, 2018 ; Khemakhem et al., 2022 ). We aim to deepen our understanding of diversity by evaluating its impact on a firm's investment behavior, focusing on a broader measure of diversity that includes specialized committees. We investigate that a wider range of perspectives within board committees correlates with more efficient resource allocation. This efficiency significantly affects corporate outcomes and has been identified as needing further research in the literature (Green & Homroy, 2018 ). We employ a statistical model incorporating multiple aspects of board committee diversity, including gender diversity, to assess their potential impacts on corporate investment efficiency. This approach contributes to the ongoing discussion about the strategic value of diversity within corporate governance. Thus, we propose that the diversity of corporate board committees is associated with more efficient corporate investment. To explore this further, we propose the following empirical model: $$\:{Investment\:behaviour}_{i,t}={\beta\:}_{0}+{\beta\:}_{1}{BCs\_Div}_{it}+{\beta\:}_{2}{Controls}_{it-1}+{FixedEffect}_{t}+{\epsilon\:}_{it}$$ 1 Our method of evaluating corporate investment efficiency includes three measures of return on invested capital (ROIC), serving as the main variable for investment efficiency, return on capital employed (ROCE) as a proxy for operational efficiency, and return on equity (ROE). This approach is according to Berk and DeMarzo ( 2007 ) as well as Penman ( 2013 ), who suggest these measures as a comprehensive tool for analyzing corporate investment behavior. We also include year, firm, and industry fixed effects in our empirical model, negating any concerns about observed elements that can potentially impact the findings of this study. Control variables We follow previous literature and include several other variables that cover diverse elements of organizational leadership and their characteristics (such as executive and board tenure) and other operational and financial elements such as return on assets (ROA), Tobin’s Q (TQ), firm size (Size), market capital value (M_Cap), Property, Plant, and Equipment (PPE), Capital Expenditures (Capex), and liquidity ratio (Cash). By incorporating these extra variables, we ensure the robustness of our analysis and enhance our results' reliability, minimizing the impact of any external factors that could deviate from the results. 4. Results The descriptive and main results and additional analysis for the dependant variable and robustness testing are provided in this section. 4.1. Descriptive statistics Table 2 shows detailed descriptive statistics for the study’s variables. The average score of board committees' diversity (BCs_Diversity) is 3.53, indicating moderate diversity. Other investment and financial performance measures, such as ROIC and ROCE, also show an average of 0.0019 and 2.83, respectively, suggesting an appropriate variation in the efficiency of resourced capital. The Return on Equity (ROE) and Return on Assets (ROA), with averages of 0.654 and 4.889, hint at various levels of profitability across companies. Tobin's Q (TQ), with an average of 0.292, points to a range of values reflecting the companies' attractiveness to investors. The firm size and market capitalization metrics suggest a broad spectrum of companies' presence in the market, with average values illustrating this diversity. As shown through property, plant, and equipment (PPE) and capital expenditures (Capex), capital investments display wide variations, indicating differing investment strategies. The relatively low average cash holdings (0.0746) highlight limited liquidity. Executive and Board Tenure, with means of 0.153 and 0.281, reflect the range of leadership experiences, indicating a blend of stability and potential for fresh perspectives in governance. This comprehensive dataset forms the basis for our examination of the impact of board diversity on firm investment behavior, highlighting the importance of considering a broad array of financial and operational characteristics. Table 2 Descriptive Statistics N Mean STD p25 Med p75 BCs_Diversity 682 3.5308 0.3588 3.4489 3.5649 3.7201 ROIC 682 0.0019 1.0012 -0.1655 0.0331 0.3218 ROCE 682 2.8258 1.1245 2.2123 2.7287 3.5009 ROE 682 0.6538 0.1217 0.6278 0.6628 0.6985 ROA 682 4.8894 0.4284 4.7902 4.9219 4.9526 TQ 682 0.2921 0.3273 0.0457 0.2032 0.4094 Size 682 0.0005 0.9901 -0.5843 -0.0158 0.4921 M_Cap 682 7.4991 1.4107 6.4691 7.3359 8.4104 PPE 682 0.2456 0.2673 0.0135 0.1297 0.4397 Capex 682 4.2496 3.1611 0.3593 2.1974 5.6408 Cash 682 0.0746 0.1282 0.0120 0.0364 0.0818 Exec_Ten 682 0.1533 0.1139 0.0923 0.1325 0.1817 Board_Ten 682 0.2806 0.1394 0.1993 0.2491 0.3245 Note: This table provides a summary of descriptive statistics for various metrics, including the total observations (N), mean, standard deviation (STD), and the 25th (p25), 50th (median), and 75th (p75) percentiles for each variable, showcasing the distribution's breadth. Variable definitions can be found in Appendix A . Table 3 employs a Pearson's correlation matrix to examine the interplay between corporate governance, financial performance, and operational metrics. Key findings include a positive correlation between board diversity (BCs_Diversity) and Return on Invested Capital (ROIC), indicating that diversity enhances investment efficiency. Furthermore, larger companies and those with higher market value have higher board diversity. There is an inverse relationship between the board committee’s diversity and TQ. Financial measures such as ROIC, ROCE, ROE, and ROA show complex associations with other measures, highlighting the complexity of corporate financial and governance interconnections. Liquidity shows a positive association with TQ but a negative association with other variables, highlighting its complex role in financial evaluations. To tackle potential multicollinearity, which could deviate from the impact of predictor variables, we performed Variance Inflation Factor (VIF) tests. The results show values below 5, confirming our variables' independence and thus reinforcing our analysis's reliability (Kutner et al., 2005 ). Table 3 Correlation Matrix Variables 1 2 3 4 5 6 7 8 9 10 11 12 13 (1) BCs_Diversity 1.000 (2) ROIC 0.223* 1.000 (3) ROCE -0.046 0.207* 1.000 (4) ROE 0.184* 0.379* 0.271* 1.000 (5) ROA 0.257* 0.460* 0.051 0.480* 1.000 (6) TQ -0.127* 0.123* 0.347* 0.112* -0.038 1.000 (7) Size 0.440* 0.033 -0.230* 0.049 0.072 -0.494* 1.000 (8) M_Cap 0.496* 0.189* -0.045 0.231* 0.118* -0.025 0.487* 1.000 (9) PPE 0.074 -0.023 -0.234* -0.066 0.012 -0.118* 0.028 0.069 1.000 (10) Capex -0.117* -0.007 -0.106* -0.036 0.010 0.014 -0.139* -0.080* 0.406* 1.000 (11) Cash -0.167* -0.143* 0.089* -0.135* -0.164* 0.381* -0.401* -0.170* -0.044 0.040 1.000 (12) Exec_Tn 0.025 0.066 0.042 0.054 0.022 0.092* -0.061 0.008 -0.037 -0.073 0.091* 1.000 (13) Board_Tn -0.110* 0.093* 0.029 0.064 0.038 0.114* -0.119* -0.051 -0.085* -0.087* 0.084* 0.357* 1.000 Note: The table shows Pearson's correlation analysis outcomes for the study variables. Asterisks denote statistical significance at the 5% threshold. 4.2. Main regression results Our panel regression analysis (Table 4 ) examines the impact of corporate board committee diversity on different elements of corporate investment behavior, including ROIC (model 1), ROCE (model 2), and ROE (model 3). The analysis shows how board committees' diversity affects corporate investment decisions. Diversity within board committees significantly increases ROIC (coefficient = 0.7826). This suggests that higher diversity within boards is linked to higher investment returns. This advocates that diverse perspectives contribute to more effective investment decisions, reinforcing the findings of Carter et al. ( 2010 ), who evidence that board diversity positively impacts firm value by broadening decision-making perspectives. Table 4 Board Committee Diversity and Corporate Investment Behavior Variables (1) (2) (3) BCs_Diversity 0.7826*** -0.0008 0.0583** (0.1687) (0.2397) (0.0247) ROA 0.7503*** 0.0506 0.0700*** (0.0583) (0.0828) (0.0085) TQ -0.2805 0.3690 -0.0751** (0.2449) (0.3481) (0.0359) Size 0.2905** -0.0217 0.0066 (0.1305) (0.1854) (0.0191) M_Cap 0.2287*** 0.0970 0.0581*** (0.0713) (0.1013) (0.0105) PPE -1.2143*** -1.6194*** -0.1201** (0.3848) (0.5471) (0.0565) Capex 0.0121** 0.0046 0.0013 (0.0061) (0.0086) (0.0009) Cash -0.5375 -0.0875 -0.0373 (0.3496) (0.4970) (0.0513) Exec_Ten -0.2852 0.0427 -0.0556 (0.3677) (0.5227) (0.0539) Board_Ten 0.4709 -0.1650 0.0772* (0.3144) (0.4468) (0.0461) Constants -7.8653*** 2.1707* -0.2953** (0.8274) (1.1762) (0.1214) Year, Firm & Industry FE Yes Yes Yes Observations 682 682 682 Adjusted R 2 0.3714 0.6241 0.2424 Note: This table outlines findings from panel regression analyses exploring the impact of board committee diversity (BCs_Diversity) on corporate investment behavior. It delves into investment efficiency (via ROIC in Model 1), return on capital employed (ROCE in Model 2), and return on equity (ROE in Model 3). The analyses incorporate year, firm, and industry fixed effects and apply robust standard errors clustered by firm. Symbols ***, **, and *, denote statistical significance at the 1%, 5%, and 10% thresholds, respectively, with p-values in parentheses. Variable definitions are detailed in Appendix A . However, the impact of diversity is not consistent across all dependent variables. Despite both ROIC and ROE benefit from diversity, with ROE displaying a moderate positive coefficient of 0.0583, the ROCE does not show a significant association. This shows that board diversity substantially impacts strategic and long-term investment decisions rather than short-term operational efficiency. Day-to-day company operations more directly influence operational efficiency and are less affected by board governance. The variation in impact highlights the critical role of board diversity in shaping different aspects of corporate investment behavior. Board committees benefit from diverse backgrounds and skills, leading to better problem-solving. This approach can develop fresh and cautious investment strategies (Harjoto et al., 2018 ), leading to higher return on invested capital (ROIC) and return on equity (ROE). Our findings show that having diverse boards enhances the quality of decision-making, especially in areas directly affected by these strategic decisions, rather than in immediate operational efficiencies. This supports the argument made by Bernile et al. ( 2018 ), who discovered that diversity within corporate boards plays a key role in reducing financial volatility and enhancing decision-making. Other control variables also reveal significant findings. For example, Return on Assets (ROA) demonstrates a robust and positive connection with both Return on Invested Capital (ROIC) and Return on Equity (ROE). This suggests that effective asset allocation enhances investment and equity returns. Conversely, investments in Property, Plant, and Equipment (PPE) have a negative effect on investment outcomes across all models. This indicates that allocating more capital to tangible assets like PPE may not always lead to improved investment results. The M_Cap and Capex are significant factors in financial analysis. M_Cap has a positive relationship with both ROIC and ROE. Meanwhile, Capex has a modest positive impact on ROIC. This reflects the complexity of market perception and investment strategies' impacts on corporate returns. Our analysis highlights the complex relationship between board committee diversity and corporate investment behavior while pointing to the complex nature of investment decision-making procedures within corporations. 4.3. Additional analysis- Investment efficiency Building on McNichols and Stubben ( 2008 ) work on corporate investment behavior, our study expands its analysis by incorporating additional measures of investment efficiency. Theoretically, firms should invest in all projects with a positive net present value (NPV) until the marginal benefits meet the marginal costs (Hayashi, 1982 ). Corporate investment decisions are strategically aimed at boosting competitive advantage and financial performance, primarily through enhanced investment efficiency (Attig et al., 2016 ). This is crucial for making well-informed investment choices and improving a firm’s overall strategic and financial health. Measuring corporate investment efficiency involves assessing a firm's ability to select projects with positive net present values (NPVs), a key indicator of financially sound investments (Gomariz & Ballesta, 2014 ). Although no direct measure exists, the method by McNichols and Stubben ( 2008 ) is an early attempt to quantify optimal investment levels. Their model identifies deviations from expected investment levels, shown as error terms, as indicators of inefficiency. We adopt this model to determine optimal investment levels and use deviations as efficiency indicators. Predicting future corporate investment involves assessing growth opportunities through the market-to-book value of assets (Q) and cash flow (CF), aligning investments with strategic goals. Our approach includes aggregating each firm's total investment—research and development, capital expenditure, and acquisitions, adjusted by selling property, plant, and equipment—and normalizing it against the prior year's total assets. We estimate this investment model cross-sectionally by year and industry, allowing for a comprehensive analysis of investment behavior across sectors and over time. Corporate investment efficiency is measured from the model’s residuals, where negative residuals indicate underinvestment and positive ones suggest overinvestment. To put these residuals in a positive light, we multiply their absolute values by -1; higher values thus indicate higher efficiency. This method helps evaluate how closely a firm’s investment actions match optimal levels. For detailed calculations and assumptions, see Appendix A . $$\:{Investment}_{i,t}=\:{\beta\:}_{0}+{\beta\:}_{1}{Q}_{i,t}+{\beta\:}_{1}{CF}_{i,t}+{\epsilon\:}_{it}$$ 2 Our regression analysis, as depicted in Table 5 , explores the impact of diversity within corporate board committees on corporate investment efficiency. The findings highlight the significant influence of board committees' diversity, identified through the diversity index (BCs_Diversity), on enhancing corporate investment efficiency, with a positive and statistically significant coefficient of 0.0180 (p < 0.05). This finding demonstrates the importance of diverse perspectives in refining investment decisions and resource allocation. Our findings highlight how diversity in the board’s viewpoints can enhance the quality of investment decisions. Our findings extend the findings of Carter et al. ( 2010 ), which state that board diversity enhances firm valuation in the market by extending the range of viewpoints in decision-making processes. Table 5 Additional Analysis: Corporate Investment Efficiency Variables (1) BCs_Diversity 0.0180** (0.0081) ROA 0.0008 (0.0057) TQ 0.0084 (0.0108) Size 0.0096** (0.0048) M_Cap -0.0006 (0.0028) PPE 0.0470*** (0.0142) Capex -0.0064*** (0.0005) Cash -0.0367* (0.0205) Exec_Ten -0.0346 (0.0249) Board_Ten 0.0449** (0.0203) Constants -0.1122*** (0.0353) Year, Firm & Industry FE Yes Observations 682 Adjusted R 2 0.3469 Note: This table presents additional analysis focusing on the influence of board committee diversity (BCs_Diversity) on corporate investment efficiency. The analyses incorporate year, firm, and industry fixed effects and apply robust standard errors clustered by firm. Symbols ***, **, and *, denote statistical significance at the 1%, 5%, and 10% thresholds, respectively, with p-values in parentheses. Variable definitions are detailed in Appendix A . The analysis of the other control variables shows that larger firms have more efficient investments. On the other hand, higher capital expenditures are linked to lower efficiency, pointing to overinvestment or inefficient capital use. Similarly, higher liquidity negatively impacts investment efficiency, recommending lower disciplined investment decisions in cash-rich companies. Additionally, longer board tenure is positively associated with investment efficiency, indicating the benefits of experienced board members (Harjoto et al., 2018 ). However, longer executive tenure does not show a significant positive effect. Furthermore, a strong positive relationship between Property, Plant, and Equipment (PPE) spending and efficiency highlights the importance of managing tangible assets effectively. Our results support our hypothesis that the diversity of board committees significantly affects corporate investment efficiency. These results expand the existing literature on corporate governance by highlighting the strategic significance of board diversity in influencing effective investment choices. Our study showcases the necessity of integrating diverse viewpoints at the decision-making level to enhance corporate investment outcomes and overall firm performance. 4.4. Robustness test- Endogeneity analysis We perform additional tests to validate the robustness of our main results. These analyses include using alternative measures of corporate investment efficiency, endogeneity, and sensitivity. Our study's term 'endogeneity' refers to the potential correlations between explanatory variables and the model’s error term, which can stem from omitted variables, measurement errors, or simultaneous causality. In the following sections, we outline the results of these analyses. To tackle the potential endogeneity issue commonly encountered in research concerning corporate governance and investment behavior, we employ robust methodologies inspired by Petrenko et al. ( 2016 ) and Ham et al. ( 2017 ). These methods aid in alleviating concerns regarding reverse causality and omitted variables. Despite the use of firm- and year-fixed effects in our panel regression analysis to control for unobserved heterogeneity, to further strengthen our results, we use an Instrumental Variable (IV) approach, following prior literature (Gholami et al., 2022 ). We introduce an instrument for board committees' diversity (BCs_Diversity), benchmarked against industry standards (Alt_BCs_Diversity_In), to generate a variable standardized across sectors. Standardization includes adjusting BCs_Diversity by the sector mean and standard deviation, ensuring comparability across different sectors. $$\:Alt\_BCs\_Diversity\_In=\frac{BCs\_Diversity-mean\:BCs\_Diversity}{SD}$$ In the first stage, we regress our endogenous variable, Alt_BCs_Diversity_In, along with other exogenous control variables to estimate its predicted values (panel A in Table 6 ). In the second stage, we use the predicted values of board diversity (Pre_BCs_Div) to assess the impact on corporate investment. We evaluate this impact across all three models (ROIC, ROCE, and ROE). Panel B presents the second stage least squares (2SLS) regression results, focusing on the effect of predicted board diversity (Pre_BCs_Div) on three key investment metrics. The analysis reveals that predicted board diversity has a substantial and statistically significant positive effect on ROIC with a coefficient of 0.8739 (p < 0.01). This supports the notion that higher levels of board diversity can significantly enhance investment efficiency. However, the results for ROCE and ROE are mixed, with a non-significant impact on ROCE (coefficient of 0.0663) and a moderately significant favorable influence on ROE (coefficient of 0.0536, p < 0.05). Table 6 Robustness Tests: Instrument variable (IV) method Panel a: First Stage of Measuring Predicted Values Variables (1) Alt_BCs_Diversity_In 0.2848*** (0.0079) ROA 0.0902*** (0.0159) TQ 0.0898*** (0.0278) Size 0.0551*** (0.0125) M_Cap -0.0120 (0.0080) PPE 0.0598** (0.0293) Capex -0.0037*** (0.0013) Cash 0.1026* (0.0587) Exec_Ten 0.0897 (0.0703) Board_Ten -0.0716 (0.0581) Constants 3.0637*** (0.0931) Year FE Yes Observations 682 Adjusted R 2 0.7732 Panel B: 2SLS Regression Results (1) (2) (3) Pre_BCs_Diversity 0.8739*** 0.0663 0.0536** (0.19063) (0.2708) (0.0281) Year FE Yes Yes Yes Observations 682 682 682 Adjusted R 2 0.3707 0.6241 0.2392 Note: This table presents robustness test outcomes via the Instrumental Variable (IV) method. Panel A executes a first-stage regression with an alternate board committee’s instrument (Alt_BCs_Diversity_In), showing its predictive capability. Panel B advances with Second Stage Least Squares (2SLS) regression analyses, utilizing these forecasts to evaluate diversity's effect in three models. Year, firm, and industry effects are considered in both panels, with significance denoted by ***, **, and *, representing the 1%, 5%, and 10% levels, respectively. Variable definitions are available in Appendix A . These IV test results validate the robustness of our primary analysis and significantly emphasize the influence of board committees' diversity in shaping corporate investment strategies. By applying the IV approach to ensure standardization across industries and address endogeneity concerns, our study highlights the critical role of board diversity in enhancing corporate governance and strategic investment decision-making, aligning with our main study's overarching conclusions. 5. Conclusion This study investigates the impact of diversity within corporate board committees on investment behavior among firms listed on the ASX 300 in the Australian stock market. We examine aspects such as the presence and size of key strategic committees (sustainability, audit, nomination, executive board, risk, and remuneration), gender representation, the inclusion of independent members, and the proportion of non-executive directors. Our research, employing panel regression models, robustness tests, and instrumental variable methods, underscores the significant role of board committee diversity in shaping corporate investment decisions. Our findings indicate that greater diversity within board committees enhances corporate investment decision-making and improves outcomes. This supports the notion that diverse perspectives improve investment decisions, echoing Carter et al. ( 2010 ), who found that board diversity positively influences firm value by broadening decision-making perspectives. However, the effect of board diversity varies across different investment measures. It has a more substantial impact on long-term and strategic decisions, as demonstrated by its influence on Return on Invested Capital (ROIC) and Return on Equity (ROE), compared to short-term operational metrics like Return on Capital Employed (ROCE). Typically, these short-term metrics are more relevant to day-to-day management, while long-term decisions are tied to board-level governance. Our results suggest that while board committee diversity improves decision-making quality, its benefits are more noticeable in areas influenced by strategic decisions rather than immediate operational efficiency. This aligns with Bernile et al. ( 2018 ), indicating that committees' diversity indirectly influences board decisions. As argued by Dellaportas et al. ( 2022 ) and Smyth et al. ( 2022 ), cross-disciplinary research helps uncover the complex and situational nature of diversity, as different components of committee diversity affect decisions differently. Our findings suggest that diverse board committees reduce financial risk and volatility while improving decision-making quality. Our additional analysis highlights the importance of diverse committee perspectives in refining investment decisions and improving resource allocation, ultimately enhancing investment efficiency. This research makes several contributions to the existing literature on corporate governance and investment efficiency. Firstly, it provides empirical evidence that board committee diversity enhances decision-making quality and financial returns through more strategic investment choices. This broadens our understanding of how board diversity and overall committee diversity similarly influence outcomes, particularly in long-term strategic decisions versus short-term operational efficiencies. It offers a fresh perspective on how committee diversity can be more effectively utilized in corporate governance. Additionally, our study provides practical insights for companies, particularly those listed on the ASX 300, on structuring their board committees to boost investment efficiency. By incorporating diverse perspectives, companies can achieve more informed and strategic decision-making processes. Furthermore, by clarifying how overall board committee diversity affects various investment decisions, this research lays the groundwork for future studies to explore these dynamics across different sectors and cultural contexts, potentially leading to tailored governance strategies. Finally, the diversity within each committee, depending on its membership, may have varying effects on reducing financial risk, improving decision-making quality, and enhancing profitability. Future research can investigate whether the diversity within individual committees influences these factors differently. Moreover, examining the impact of diversity in voluntary committees, such as the sustainability committee, can address complex and critical issues Lukka and Becker ( 2023 ) identified, such as the role of diversity in environmental and social decision-making. Future research into corporate social and environmental activities, particularly those involving gender and other diversity components, is recognized by Maran et al. ( 2023 ) and supported by theoretical reflections from Reilley and Löhlein ( 2023 ), as essential for understanding the diversity and complexity of individuals' roles within board committees. Declarations Author Contribution A.A. led the conceptualisation and manuscript preparation. L.D., J.L., and J.S. contributed to the literature review, data analysis, and interpretation. R.B. provided critical revisions and theoretical insights. 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Int J Acad Inform Syst Res (IJAISR) 5(4):24–39 Footnotes Corporate investment efficiency refers to the alignment between a firm’s actual investment activities and the optimal investment level expected based on the firm’s growth opportunities. This concept encompasses both over-investment, where investments exceed the optimal threshold, and under-investment, where investments fall short of what is required to fully capitalize on growth opportunities McNichols, M. F., & Stubben, S. R. (2008). Does Earnings Management Affect Firms' Investment Decisions? The Accounting Review , 83 (6), 1571–1603. https://doi.org/10.2308/accr.2008.83.6.1571 . Additional Declarations No competing interests reported. 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Introduction","content":"\u003cp\u003eThe movement towards corporate board diversity to create more inclusive and effective decision-making mechanisms is increasingly shaping the debates in corporate governance (Rao \u0026amp; Tilt, \u003cspan citationid=\"CR71\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). Cross-disciplinary accounting research combines different fields of study to understand better the main components (Dellaportas et al., \u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). Although many studies have investigated how gender diversity on corporate boards impacts financial performance, the results are mixed and often inconclusive (Gordini \u0026amp; Rancati, \u003cspan citationid=\"CR36\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). This indicates further studies are needed to identify the possible causes of these mixed results. One important gap in the research is the lack of focus on the overall impact of diversity within board committees compared to executive board diversity. Committees develop and present crucial strategic recommendations to the board. Past research findings have emphasized the importance of moving research beyond mere numerical diversity representation so that a more comprehensive understanding of how committee diversity influences corporate operations, both within the governance mechanism and firms' profitability (Green \u0026amp; Homroy, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2018\u003c/span\u003e). Building on this idea, Singhania et al. (\u003cspan citationid=\"CR75\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) found that diversity within remuneration and nomination committees can boost financial performance, showing the significant impact of these sub-groups on corporate decisions. However, their study was limited to only these two key strategic board committees, aligning with the limited prior research on their diversity.\u003c/p\u003e \u003cp\u003eUsing the theoretical framework of agency theory, which supports board committee diversity in managing agency conflicts and improving corporate decision-making, our study investigates how diverse viewpoints within these sub-committees help businesses monitor and direct management teams in aligning the interests of shareholders and executives (Adams \u0026amp; Ferreira, \u003cspan citationid=\"CR2\" class=\"CitationRef\"\u003e2009\u003c/span\u003e; Jensen \u0026amp; Meckling, \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e1976\u003c/span\u003e). The diverse viewpoints in the boardroom facilitate decision-making and recommend required mechanisms for corporations to navigate complex investment opportunities (Hillman et al., \u003cspan citationid=\"CR44\" class=\"CitationRef\"\u003e2000\u003c/span\u003e). More recently, board gender diversity and reducing investment inefficiency have been studied (Baik et al., \u003cspan citationid=\"CR10\" class=\"CitationRef\"\u003e2024\u003c/span\u003e; Farooq et al., \u003cspan citationid=\"CR29\" class=\"CitationRef\"\u003e2023\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eAlthough substantial research on the impact of board diversity on various aspects of organizational performance, including investment efficiency, the precise influence of diversity within board committees on investment efficiency has not been extensively studied. Our study seeks to fill this gap by examining how diverse compositions within board committees affect corporate investment behavior, decision-making, and investment efficiency\u003csup\u003e1\u003c/sup\u003e. We aim to determine whether diverse perspectives within these committees result in more effective investment outcomes.\u003c/p\u003e \u003cp\u003eOur research focuses on corporate investment behavior and decision-making, which are crucial to a firm's financial health (Gomariz \u0026amp; Ballesta, \u003cspan citationid=\"CR35\" class=\"CitationRef\"\u003e2014\u003c/span\u003e). Various measures of corporate investment behavior and outcomes are used to explore how diversity across board committees might influence strategic investment choices, including how well these choices align with optimal investment levels (McNichols \u0026amp; Stubben, \u003cspan citationid=\"CR61\" class=\"CitationRef\"\u003e2008\u003c/span\u003e). By investigating the strategic role of overall committees\u0026rsquo; diversity, our study enhances the understanding of how it can either bolster or hinder effective investment decision-making. This focus contributes to the importance of committee diversity in underscoring strategic corporate governance and an understanding of factors contributing to optimizing financial performance.\u003c/p\u003e \u003cp\u003eWe collected data on variables affecting our diversity measure, specifically from strategic committees such as sustainability, audit, nomination, executive board, risk, and remuneration, of firms listed on the ASX 300 from 2018 to 2020. Our assessment focused on several aspects of diversity, including the presence of these committees, their size, gender representation, and the proportions of independent and non-executive members. Our findings reveal that greater diversity within board committees significantly enhances the quality of corporate investment decision-making, particularly in long-term strategic areas. The findings indicate that while the benefits of board committees' diversity are apparent across various investment metrics, they are most substantial in decisions that shape strategic, long-term investments rather than short-term operational efficiencies. Additionally, our extended analysis shows how different viewpoints contribute to investment decision-making and improve resource allocation and investment efficiency. This analysis highlights the important role of diversity in improving board-level governance and enhancing financial outcomes, providing valuable insights for establishing a robust corporate governance structure. Our findings remain consistent after performing different tests, such as using different measures of corporate investment behavior and endogeneity tests. We are not claiming that we fully address potential endogeneity issues, but performing an instrumental variable (IV) method to address this important concern while removing it can be challenging.\u003c/p\u003e \u003cp\u003eOur findings advance the understanding of corporate governance and its influence on corporate investment behavior. It also provides evidence that board committee diversity improves both decision-making quality and financial return through the choice of strategic investment opportunities. This study highlights the influence of committee diversity on long-term strategic decisions versus short-term operational efficiencies, which is an important viewpoint on how it can be leveraged within corporate governance. Furthermore, our findings provide practical insights into organizations, suggesting that incorporating diverse viewpoints within committees can lead to more strategic decision-making, particularly in corporate investment strategies.\u003c/p\u003e \u003cp\u003eThis article follows with the next section by providing a literature review, theoretical background, and development of hypotheses. It then continues with research design, empirical findings, and robustness analysis. The conclusion presents the discussion and implications of the findings.\u003c/p\u003e"},{"header":"2. Review of literature and development of hypotheses","content":"\u003cp\u003eAgency theory provides a useful framework for investigating how diversity within corporate board committees influences investment behavior (Jensen \u0026amp; Meckling, \u003cspan citationid=\"CR45\" class=\"CitationRef\"\u003e1976\u003c/span\u003e). According to agency theory, one of the primary roles of corporate boards is to oversee management, a task that can be strengthened by greater diversity among board members (Ararat et al., \u003cspan citationid=\"CR7\" class=\"CitationRef\"\u003e2015\u003c/span\u003e). While directors serve on various board committees, the composition of these committees varies, suggesting that diversity at the board level might naturally extend to the committee level. However, each committee's diversity level may differ based on its specific characteristics and requirements.\u003c/p\u003e \u003cp\u003eResearch has identified several factors that shape the diversity of board committees, noting that a significant amount of decision-making occurs at the committee level (Ellstrand et al., \u003cspan citationid=\"CR26\" class=\"CitationRef\"\u003e1999\u003c/span\u003e, p. 67). Adams et al. (\u003cspan citationid=\"CR1\" class=\"CitationRef\"\u003e2018\u003c/span\u003e) emphasize that directors are multifaceted and argue that regulatory disclosures should include specific characteristics such as experience, qualifications, attributes, and skills as part of board diversity. Klein (\u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e1998\u003c/span\u003e) found that committee experience is positively linked to higher stock returns and investment performance. Diversity is often associated with experienced, skilled, non-executive (outside) directors who bring greater independence to decision-making, leading to more informed choices (Sarkar \u0026amp; Selarka, \u003cspan citationid=\"CR73\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). It also reduces the risk of decisions being dominated by a few board members, adding a broader range of skills, leadership styles, values, and networks. Additionally, higher diversity can reduce a company's reliance on external conditions and improve its resilience and adaptability (Nicol\u0026ograve; et al., \u003cspan citationid=\"CR64\" class=\"CitationRef\"\u003e2022\u003c/span\u003e). The size of board committees is also an important characteristic to consider when assessing diversity (Altin, \u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Gender diversity has similarly been recognized as a key component of committee diversity (Khan et al., 2020). The existence of specific committees, some of which are voluntary while others are mandated by the ASX recommendations or the Corporations Act (2001) in Australia, also plays a role in determining the impact of committee diversity. This study includes other committees acknowledging that their presence or absence affects the overall diversity and, consequently, the impact on corporate outcomes. From the agency theory perspective, this study hypothesizes that diversity within board committees enhances corporate investment decisions and performance outcomes.\u003c/p\u003e \u003cdiv id=\"Sec3\" class=\"Section2\"\u003e \u003ch2\u003e2.1. Diversity in board committees and corporate performance\u003c/h2\u003e \u003cp\u003eBoard committees are crucial in corporate governance, monitoring, and consulting tasks (Bugeja et al., \u003cspan citationid=\"CR18\" class=\"CitationRef\"\u003e2016\u003c/span\u003e). They provide several benefits, including decentralized strategic decision-making, efficient role distributions, expertise, improved board accountability, and reduced agency conflicts through proper supervision, leadership separation, and monitoring responsibilities (Berezinets et al., \u003cspan citationid=\"CR13\" class=\"CitationRef\"\u003e2017\u003c/span\u003e). The diversity within nomination committees enhances discussions, as members are more likely to select capable directors who can significantly contribute to the company\u0026rsquo;s economic success (Kahane et al., \u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e2013\u003c/span\u003e). The following sub-sections will describe various characteristics of board committee diversity\u0026mdash;such as size, experience of independent directors, the influence of non-executive directors\u0026rsquo; independence, and gender diversity\u0026mdash;and explore their impact on corporate performance, particularly in terms of investment and financial outcomes.\u003c/p\u003e \u003cp\u003eCommittee size diversity and corporate performance\u003c/p\u003e \u003cp\u003eResearch has shown conflicting findings regarding the relationship between audit committee size and firm performance. Altin (\u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2024\u003c/span\u003e) conducted a meta-analysis of 39 previous studies and found a significant positive relationship between audit committee size and firm performance in both developed and developing countries. Smaller audit committees, particularly those with more experience and financial expertise, were more likely to be associated with positive firm performance (Aldamen et al., \u003cspan citationid=\"CR4\" class=\"CitationRef\"\u003e2012\u003c/span\u003e). However, Al-Matari et al. (\u003cspan citationid=\"CR3\" class=\"CitationRef\"\u003e2014\u003c/span\u003e) reported that while audit committee size has an insignificant positive relationship with firm value, larger committees may lead to poorer performance, as agency theory suggests. In contrast, Fariha et al. (\u003cspan citationid=\"CR28\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) found a significant and positive relationship between audit committee size and firm performance. These mixed results and the potential agency problems associated with committee size indicate that further investigation is necessary. Therefore, committee size diversity is included as a component of board diversity in the current study.\u003c/p\u003e \u003cp\u003eExperienced independence directors and corporate performance\u003c/p\u003e \u003cp\u003eCurrent regulations do not specify requirements for the diversity components of board committees. Although research highlights the importance of directors' expertise (Dass et al., \u003cspan citationid=\"CR23\" class=\"CitationRef\"\u003e2014\u003c/span\u003e; Faleye et al., \u003cspan citationid=\"CR27\" class=\"CitationRef\"\u003e2018\u003c/span\u003e), there is limited evidence on how directors with specific skills are assigned to the appropriate committees. Altin (\u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2024\u003c/span\u003e) examined 39 previous studies, revealing a significant positive relationship between audit committee industry expertise and firms' financial performance. Similarly, Das et al. (\u003cspan citationid=\"CR22\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) found a positive market reaction when directors with financial expertise joined audit committees, emphasizing the importance of aligning directors' skills with committee requirements. In addition to the expertise and experience of independent directors, their high level of independence is another crucial characteristic (Mohid Rahmat et al., \u003cspan citationid=\"CR63\" class=\"CitationRef\"\u003e2009\u003c/span\u003e) which will be discussed further in the next sub-section. These findings highlight the importance of studying the experience of external directors as a key component of board committee diversity.\u003c/p\u003e \u003cp\u003eNon-executive directors and corporate performance\u003c/p\u003e \u003cp\u003eBeavers and Mobbs (\u003cspan citationid=\"CR11\" class=\"CitationRef\"\u003e2020\u003c/span\u003e) argue that the presence of a CEO on a nomination committee is associated with a reduced rate of independent director appointments. In contrast, Guo and Masulis (\u003cspan citationid=\"CR40\" class=\"CitationRef\"\u003e2015\u003c/span\u003e) found that firms with fully independent nomination committees composed entirely of non-executive directors show a stronger correlation between CEO turnover and firm performance. These findings underscore the importance of non-executive directors' independence in influencing nomination committees. Poretti et al. (\u003cspan citationid=\"CR69\" class=\"CitationRef\"\u003e2018\u003c/span\u003e) also found that the independence of audit committees impacts the timing of earnings announcements. The significance of non-executive directors is further highlighted by the requirement in some jurisdictions for audit committees to be composed of at least two-thirds non-executive directors, owing to their level of independence. Research shows that the independence of audit committees positively affects firm performance in both developed (Khanchel, \u003cspan citationid=\"CR52\" class=\"CitationRef\"\u003e2007\u003c/span\u003e) and developing countries (Altin, \u003cspan citationid=\"CR6\" class=\"CitationRef\"\u003e2024\u003c/span\u003e). Additionally, the requirement for remuneration committees to include non-executive directors is seen as a response to agency problems (Klein, \u003cspan citationid=\"CR54\" class=\"CitationRef\"\u003e1998\u003c/span\u003e). Separate risk committees, composed of non-executive directors, have been found to enhance company value and improve performance compared to firms without such committees (Ghazieh \u0026amp; Chebana, \u003cspan citationid=\"CR32\" class=\"CitationRef\"\u003e2021\u003c/span\u003e; Jia \u0026amp; Bradbury, \u003cspan citationid=\"CR46\" class=\"CitationRef\"\u003e2021\u003c/span\u003e). Kallamu (\u003cspan citationid=\"CR51\" class=\"CitationRef\"\u003e2015\u003c/span\u003e) found that risk management committees with non-executive directors positively impact firms' market valuation and investment.\u003c/p\u003e \u003cp\u003eSimilarly, Malik et al. (\u003cspan citationid=\"CR58\" class=\"CitationRef\"\u003e2020\u003c/span\u003e) report that effective risk committees are significantly and positively associated with firm performance. Ugwu et al. (\u003cspan citationid=\"CR77\" class=\"CitationRef\"\u003e2021\u003c/span\u003e) reveal that it significantly improves financial performance when most non-executive directors are on the risk management committee. Therefore, these findings support the inclusion of non-executive directors as a component of board committee diversity.\u003c/p\u003e \u003cp\u003eGender diversity and corporate performance\u003c/p\u003e \u003cp\u003eThe literature examines how gender diversity on corporate boards impacts company values and productivity. Earlier research indicated that between 1992 and 1997, more women joined the workforce, but the increase in women holding executive positions was not as substantial (Black \u0026amp; Juhn, \u003cspan citationid=\"CR17\" class=\"CitationRef\"\u003e2000\u003c/span\u003e). Becker (\u003cspan citationid=\"CR12\" class=\"CitationRef\"\u003e2010\u003c/span\u003e) argues that underrepresenting women in executive roles may reflect a systematic bias against gender diversity in board appointments, potentially placing companies at a competitive disadvantage. This bias against gender diversity in board roles may also extend to board committees, which can similarly disadvantage companies. Sheerin and Garavan (\u003cspan citationid=\"CR74\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) noted a lack of evidence regarding whether female directors operate heterogeneously in their decision-making rather than being part of a homogeneous group. They suggested that the diverse norms of female leaders can complement those of their male counterparts (Clavijo \u0026amp; Perray-Redslob, \u003cspan citationid=\"CR21\" class=\"CitationRef\"\u003e2024\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eOn the other hand, it has been argued that female directors on committees can enhance governance quality and contribute to the benefits of diversity on corporate boards (Green \u0026amp; Homroy, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Kakabadse et al., \u003cspan citationid=\"CR50\" class=\"CitationRef\"\u003e2015\u003c/span\u003e). Including female directors can lead to more thorough analyses in complex situations, potentially resulting in a more cautious approach that improves financial performance. Gender diversity in board committees can also foster discussions where members are more likely to select capable directors who contribute significantly to the company\u0026rsquo;s economic success (Kahane et al., \u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e2013\u003c/span\u003e). Ararat and Yurtoglu (\u003cspan citationid=\"CR8\" class=\"CitationRef\"\u003e2021\u003c/span\u003e) found that including female directors in board committees positively impacts corporate valuation.\u003c/p\u003e \u003cp\u003eSome studies suggest that having a mix of genders in executive roles can improve oversight and overall corporate performance (Ali, \u003cspan citationid=\"CR5\" class=\"CitationRef\"\u003e2016\u003c/span\u003e; Joecks et al., \u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e2013\u003c/span\u003e). Joecks et al. (\u003cspan citationid=\"CR47\" class=\"CitationRef\"\u003e2013\u003c/span\u003e) provide evidence of a U-shaped relationship between gender diversity and performance among German companies, indicating that the benefits of gender diversity increase as it grows. Michaelidou and Moraes (\u003cspan citationid=\"CR62\" class=\"CitationRef\"\u003e2017\u003c/span\u003e) also found that organizations with more female directors experience lower information asymmetry and improved corporate performance. The consensus appears to be that higher gender diversity is beneficial for organizations, as it leads to the inclusion of more capable women in place of male members (Kahane et al., \u003cspan citationid=\"CR49\" class=\"CitationRef\"\u003e2013\u003c/span\u003e).\u003c/p\u003e \u003cp\u003eHowever, research on the impact of female representation on corporate performance yields mixed results. Some studies (e.g., Gregory-Smith et al. (\u003cspan citationid=\"CR38\" class=\"CitationRef\"\u003e2014\u003c/span\u003e); Pletzer et al. (\u003cspan citationid=\"CR68\" class=\"CitationRef\"\u003e2015\u003c/span\u003e); and Post and Byron (\u003cspan citationid=\"CR70\" class=\"CitationRef\"\u003e2015\u003c/span\u003e)) suggest that the gender composition of directors may have little or even negative impact on corporate outcomes. Conversely, others argue that female directors on boards are associated with higher equity price informativeness and improved quality of corporate disclosure (Gao, \u003cspan citationid=\"CR30\" class=\"CitationRef\"\u003e2018\u003c/span\u003e; Gul et al., \u003cspan citationid=\"CR39\" class=\"CitationRef\"\u003e2011\u003c/span\u003e). Additionally, Khemakhem et al. (\u003cspan citationid=\"CR53\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) and Berle et al. (\u003cspan citationid=\"CR15\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) also show that the benefits of gender diversity extend beyond the board to specialized committees, enhancing decision-making. Garanina and Muravyev (\u003cspan citationid=\"CR31\" class=\"CitationRef\"\u003e2021\u003c/span\u003e) argue that to realize the full benefits of diversity on boards, women must hold positions that influence corporate decisions.\u003c/p\u003e \u003cp\u003eWhile numerous studies have explored the relationship between gender diversity on boards and financial performance, the findings often point to symbolic inclusion rather than directly influencing performance (Chang et al., \u003cspan citationid=\"CR20\" class=\"CitationRef\"\u003e2019\u003c/span\u003e; Green \u0026amp; Homroy, \u003cspan citationid=\"CR37\" class=\"CitationRef\"\u003e2018\u003c/span\u003e). If female directors are appointed mainly for regulatory compliance, their inclusion in committees is more likely when there are clear benefits to the committee's operations.\u003c/p\u003e \u003cp\u003eThe benefits of gender diversity identified in previous studies support including this variable as a component of board committee diversity. Investigating the impact of diversity within board committees on investment behavior is crucial. A mix of gender, skills, expertise, and backgrounds enhances decision-making, leading to more comprehensive evaluations of investment opportunities and associated risks (Bernile et al., \u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2018\u003c/span\u003e). Diversity broadens corporate discussions, vital for assessing complex investment situations and improving outcomes. Informed decision-making, strategic goals, and specialized board committees can significantly impact corporate financial outcomes through enhanced investment decisions. Therefore, this study proposes the following hypothesis:\u003c/p\u003e \u003cp\u003e \u003cem\u003eH1: There is a positive relationship between corporate board committees\u0026rsquo; diversity and corporate investment outcomes.\u003c/em\u003e \u003c/p\u003e \u003c/div\u003e"},{"header":"3. Research design","content":"\u003cdiv id=\"Sec5\" class=\"Section2\"\u003e\n\u003ch2\u003e3.1. Variables measurement\u003c/h2\u003e\n\u003cp\u003eSeveral characteristics are identified and used to operationalize and reflect the complexity of board committee diversity, the independent variable used to test the hypothesis. The dependent variable, corporate investment decisions, relies on a primary measure of corporate investment efficiency used in prior studies. These measures are discussed in the following two sub-sections.\u003c/p\u003e\n\u003cp\u003eDiversity of board committees\u003c/p\u003e\n\u003cp\u003eThis research examines the association between corporate governance and corporate investment behavior, concentrating on the important role of diversity within board committees. Particularly, we examine the complexity of diversity within corporate board committees. We evaluate different characteristics of diversity, including their existence, the size of committees, female representation, and the presence of independent and non-executive board members. These characteristics help construct an inclusive view of diversity beyond gender-centered measures.\u003c/p\u003e\n\u003cp\u003eDespite the mixed findings of the research on the influence of corporate board gender diversity on financial performance (Carter et al., \u003cspan class=\"CitationRef\"\u003e2010\u003c/span\u003e), there are still unanswered questions about the qualitative impacts of diverse viewpoints on the effectiveness of board committees. The existing research gap calls for more studies on how diversity in board committees influences corporate operations. Recent studies have recognized the importance of evaluating diversity within executive boards and key strategic committees (Khemakhem et al., \u003cspan class=\"CitationRef\"\u003e2022\u003c/span\u003e). Specifically, adding females to these key strategic committees affects corporate disclosure, operations, governance, and potential investment choices and outcomes. We attempt to create a measure of board committee diversity that covers these aspects to show its broad influence on organizational decision choices and investment results.\u003c/p\u003e\n\u003cp\u003eWe introduce the diversity index (BCs_Diversity) to evaluate diversity across main strategic committees, such as sustainability, nomination, audit, executive, risk, and remuneration committees for ASX 300 in the Australian equity market. We selected these committees due to their common appearance across the sample firms, which recommends a consistent basis for our evaluations. The data for our index is collected manually, ensuring its robustness and consistent basis for examining how the diversity of committees affects corporate investment behavior.\u003c/p\u003e\n\u003cp\u003eOur index evaluates board committees based on five key elements of diversity. First, it assesses whether the committee exists because some committees are voluntary and assigns a score of 0 for absence and 1 for presence. Next, it considers the committee size, applying a normalized measure that ranges from 0 to 1 based on the number of members. The index also looks at gender diversity, specifically the presence of at least one female member on the committee. Additionally, it evaluates the presence of independent members within the committee. Finally, the index considers the role of executive members, particularly the presence of non-executive members. Our measure, inspired by Carter et al. (\u003cspan class=\"CitationRef\"\u003e2010\u003c/span\u003e), emphasizes crucial elements such as independence and non-executive membership. This approach helps us better understand board diversity and its impact on financial outcomes. Our approach in this study seeks to offer an inclusive perspective on committee diversity, treating each element equally in alignment with our research objectives. We calculate the diversity score by assessing each criterion, and the overall diversity score is determined by averaging these individual scores. Following the methods outlined in prior literature, we normalize the aggregated scores to a standard scale from 0 to 1 to enhance comparability, as Hair et al. (2006) suggested. Details about the construction of the index, the formulas used, and the normalization method are provided in Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/p\u003e\n\u003cp\u003eCorporate investment decisions\u003c/p\u003e\n\u003cp\u003eIn line with previous research, this study focuses on Return on Invested Capital (ROIC) as the primary measure of corporate investment efficiency, as discussed by Durnev et al. (\u003cspan class=\"CitationRef\"\u003e2004\u003c/span\u003e) and Mauboussin and Callahan (\u003cspan class=\"CitationRef\"\u003e2014\u003c/span\u003e). ROIC measures how effectively a company generates returns from its investments. It uses net profit after tax as the numerator and total invested capital as the denominator. Therefore, it provides insight into corporate investment efficiency (Durnev et al., \u003cspan class=\"CitationRef\"\u003e2004\u003c/span\u003e). Additionally, following prior research by Jyoti and Khanna (\u003cspan class=\"CitationRef\"\u003e2021\u003c/span\u003e), our analysis includes two other measures of corporate investment behavior: Return on Capital Employed (ROCE) and Return on Equity (ROE). ROCE recommends a broader assessment of profitability and capital allocation efficiency by using earnings before interest and tax (EBIT) and employing capital (equity and debt) as a denominator. This measure complements our first corporate investment efficiency (ROIC) measure by concentrating on the return from operational resources allocation after excluding short-term debts. Furthermore, as a main indicator of financial performance from an investor\u0026rsquo;s viewpoint, ROE concentrates on the return generated from shareholder\u0026rsquo;s equity. ROE directly measures how effectively a company utilise its equity financing to grow and generate economic outcomes. These three measures recommend an inclusive overview of investment behavior, from different viewpoints of operational efficiency to profitability performance and provide a robust understanding of corporate investment dynamics. A detailed measurement of our main investment variables is presented in Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec6\" class=\"Section2\"\u003e\n\u003ch2\u003e3.2. Sample selection and data\u003c/h2\u003e\n\u003cp\u003eFor this study, we manually collect information on different elements if corporate board committees that are integral to our diversity index measurement. We capture this information from various sources such as corporate official disclosures, corporate websites, and other relevant disclosures. We combine this with financial and investment information collected through secondary data, including Bloomberg and Refinitiv databases.\u003c/p\u003e\n\u003cp\u003eThis study evaluates companies listed in ASX 300 in the Australian equity market from 2018 to 2020. Following prior literature, we include additional firm-level characteristics such as corporate executives\u0026rsquo; average tenure (Exec_Ten) and board members\u0026rsquo; average tenure (Board_Ten) (Ham et al., \u003cspan class=\"CitationRef\"\u003e2017\u003c/span\u003e; O'Reilly et al., \u003cspan class=\"CitationRef\"\u003e2018\u003c/span\u003e). Our analysis also includes other financial and investment-related variables impacting corporate investment decision-making. We include return on investment (ROA), a proxy for financial performance, Tobin\u0026rsquo;s Q (TQ) as a proxy for corporate investment attractiveness in the equity market, firm size (Size) and its market capital value (M_Cap), Property, Plant, and Equipment (PPE), Capital Expenditures (Capex), and cash ratios (Cash) which can potentially related or impact on the corporate investment behavior. We consider winsorization (to the first and 99th percentiles) across all continuous variables to address and maintain the impact of potential outliers in our analysis (Gholami et al., \u003cspan class=\"CitationRef\"\u003e2023\u003c/span\u003e). This method strengthens our analysis and helps us fully understand what impacts corporate investment decisions within the framework of the Australian equity market.\u003c/p\u003e\n\u003cp\u003eTable\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e1\u003c/span\u003e presents a detailed overview of how the study sample is selected and spread across various industries. Panel A shows how the sample was selected for 2018 to 2020, starting with 865 observations. After removing 142 observations due to the incomplete firm-level investment data and another 41 observations due to missing control variables, the final sample includes 682 observations. Panel B shows the final sample by industry sector. Materials is the largest represented sector in the sample, with 19%, Financials at 15%, and Consumer Discretionary at 12%. The Communications and Energy sectors comprise 4% of the total, while the Utilities sector represents only 2%, showing a broad yet varied representation across different sectors.\u003c/p\u003e\n\u003cdiv class=\"gridtable\"\u003e\n\u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n\u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n\u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n\u003ctable id=\"Tab1\" style=\"width: 518px;\" border=\"1\"\u003e\u003ccaption\u003e\n\u003cdiv class=\"CaptionNumber\"\u003eTable 1\u003c/div\u003e\n\u003cdiv class=\"CaptionContent\"\u003e\n\u003cp\u003eSample selection and distribution\u003c/p\u003e\n\u003c/div\u003e\n\u003c/caption\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth style=\"width: 758.539px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003ePanel A: Sample selection\u003c/p\u003e\n\u003c/th\u003e\n\u003cth style=\"width: 106.215px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003eFinal observation\u003c/p\u003e\n\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 758.539px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003eData coverage 2018\u0026ndash;2020\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 106.215px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e865\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 758.539px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003eLess: Observations dropped due to insufficient firm risk data\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 106.215px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e142\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 758.539px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003eLess: Observations dropped due to insufficient control variables\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 106.215px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e41\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 758.539px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003eFinal sample 2018\u0026ndash;2020\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 106.215px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e682\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003ePanel B: Industry-base distribution of firms in sample\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003eObservations\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e%\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eCommunications\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e24\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e4\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eConsumer discretionary\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e82\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e12\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eConsumer staples\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e41\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e6\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eEnergy\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e24\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e4\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eFinancials\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e102\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e15\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eHealthcare\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e57\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e8\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eIndustrials\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e69\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e10\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eInformation technology\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e59\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e9\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eMaterials\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e132\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e19\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eReal-estate\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e78\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e11\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003eUtilities\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e12\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e2\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 357px;\" align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003eTotal\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 460.755px;\" colspan=\"2\" align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003e682\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003ctd style=\"width: 37px;\" align=\"left\"\u003e\n\u003cp\u003e\u003cstrong\u003e100\u003c/strong\u003e\u003c/p\u003e\n\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003ctfoot\u003e\n\u003ctr\u003e\n\u003ctd style=\"width: 864.755px;\" colspan=\"4\"\u003eNote: The table outlines the sample's distribution across various years and industry sectors.\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tfoot\u003e\n\u003c/table\u003e\n\u003c/div\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec7\" class=\"Section2\"\u003e\n\u003ch2\u003e3.3. Empirical models\u003c/h2\u003e\n\u003cp\u003eThis section introduces the empirical models used to investigate the relationship between the diversity of board committees and investment efficiency.\u003c/p\u003e\n\u003cp\u003eRecent research highlights the significant impact of gender diversity on corporate boards, especially concerning corporate strategic decision-making (Lai et al., \u003cspan class=\"CitationRef\"\u003e2023\u003c/span\u003e). The literature highlights that board gender diversity results in broader viewpoints and higher cooperation among board members, eventually improving decision-making quality. Following these insights, other studies emphasize the importance of diversity, not just in terms of gender but also across the strategic committees of the board (Green \u0026amp; Homroy, \u003cspan class=\"CitationRef\"\u003e2018\u003c/span\u003e; Khemakhem et al., \u003cspan class=\"CitationRef\"\u003e2022\u003c/span\u003e). We aim to deepen our understanding of diversity by evaluating its impact on a firm's investment behavior, focusing on a broader measure of diversity that includes specialized committees. We investigate that a wider range of perspectives within board committees correlates with more efficient resource allocation. This efficiency significantly affects corporate outcomes and has been identified as needing further research in the literature (Green \u0026amp; Homroy, \u003cspan class=\"CitationRef\"\u003e2018\u003c/span\u003e). We employ a statistical model incorporating multiple aspects of board committee diversity, including gender diversity, to assess their potential impacts on corporate investment efficiency. This approach contributes to the ongoing discussion about the strategic value of diversity within corporate governance. Thus, we propose that the diversity of corporate board committees is associated with more efficient corporate investment. To explore this further, we propose the following empirical model:\u003c/p\u003e\n\u003cdiv id=\"Equ1\" class=\"Equation\"\u003e\n\u003cdiv id=\"FileID_Equ1\" class=\"mathdisplay\"\u003e$$\\:{Investment\\:behaviour}_{i,t}={\\beta\\:}_{0}+{\\beta\\:}_{1}{BCs\\_Div}_{it}+{\\beta\\:}_{2}{Controls}_{it-1}+{FixedEffect}_{t}+{\\epsilon\\:}_{it}$$\u003c/div\u003e\n\u003cdiv class=\"EquationNumber\"\u003e1\u003c/div\u003e\n\u003c/div\u003e\n\u003cp\u003eOur method of evaluating corporate investment efficiency includes three measures of return on invested capital (ROIC), serving as the main variable for investment efficiency, return on capital employed (ROCE) as a proxy for operational efficiency, and return on equity (ROE). This approach is according to Berk and DeMarzo (\u003cspan class=\"CitationRef\"\u003e2007\u003c/span\u003e) as well as Penman (\u003cspan class=\"CitationRef\"\u003e2013\u003c/span\u003e), who suggest these measures as a comprehensive tool for analyzing corporate investment behavior. We also include year, firm, and industry fixed effects in our empirical model, negating any concerns about observed elements that can potentially impact the findings of this study.\u003c/p\u003e\n\u003cp\u003eControl variables\u003c/p\u003e\n\u003cp\u003eWe follow previous literature and include several other variables that cover diverse elements of organizational leadership and their characteristics (such as executive and board tenure) and other operational and financial elements such as return on assets (ROA), Tobin\u0026rsquo;s Q (TQ), firm size (Size), market capital value (M_Cap), Property, Plant, and Equipment (PPE), Capital Expenditures (Capex), and liquidity ratio (Cash). By incorporating these extra variables, we ensure the robustness of our analysis and enhance our results' reliability, minimizing the impact of any external factors that could deviate from the results.\u003c/p\u003e\n\u003c/div\u003e"},{"header":"4. Results","content":"\u003cp\u003eThe descriptive and main results and additional analysis for the dependant variable and robustness testing are provided in this section.\u003c/p\u003e\n\u003cdiv id=\"Sec9\" class=\"Section2\"\u003e\n \u003ch2\u003e4.1. Descriptive statistics\u003c/h2\u003e\n \u003cp\u003eTable\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e2\u003c/span\u003e shows detailed descriptive statistics for the study\u0026rsquo;s variables. The average score of board committees\u0026apos; diversity (BCs_Diversity) is 3.53, indicating moderate diversity. Other investment and financial performance measures, such as ROIC and ROCE, also show an average of 0.0019 and 2.83, respectively, suggesting an appropriate variation in the efficiency of resourced capital. The Return on Equity (ROE) and Return on Assets (ROA), with averages of 0.654 and 4.889, hint at various levels of profitability across companies. Tobin\u0026apos;s Q (TQ), with an average of 0.292, points to a range of values reflecting the companies\u0026apos; attractiveness to investors. The firm size and market capitalization metrics suggest a broad spectrum of companies\u0026apos; presence in the market, with average values illustrating this diversity. As shown through property, plant, and equipment (PPE) and capital expenditures (Capex), capital investments display wide variations, indicating differing investment strategies. The relatively low average cash holdings (0.0746) highlight limited liquidity. Executive and Board Tenure, with means of 0.153 and 0.281, reflect the range of leadership experiences, indicating a blend of stability and potential for fresh perspectives in governance. This comprehensive dataset forms the basis for our examination of the impact of board diversity on firm investment behavior, highlighting the importance of considering a broad array of financial and operational characteristics.\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\n \u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n \u003ctable id=\"Tab2\" border=\"1\"\u003e\n \u003ccaption\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 2\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eDescriptive Statistics\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eN\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eMean\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eSTD\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003ep25\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eMed\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003ep75\u003c/p\u003e\n \u003c/th\u003e\n \u003cth colspan=\"1\" align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eBCs_Diversity\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.5308\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3588\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.4489\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.5649\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.7201\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eROIC\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0019\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.0012\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.1655\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0331\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3218\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eROCE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.8258\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.1245\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.2123\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.7287\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.5009\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eROE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.6538\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1217\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.6278\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.6628\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.6985\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eROA\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e4.8894\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.4284\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e4.7902\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e4.9219\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e4.9526\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eTQ\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2921\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3273\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0457\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2032\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.4094\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eSize\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0005\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.9901\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.5843\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0158\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.4921\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eM_Cap\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e7.4991\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.4107\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e6.4691\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e7.3359\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e8.4104\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003ePPE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2456\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2673\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0135\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1297\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.4397\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCapex\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e4.2496\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.1611\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3593\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.1974\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e5.6408\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCash\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0746\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1282\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0120\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0364\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0818\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eExec_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1533\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1139\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0923\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1325\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1817\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eBoard_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2806\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1394\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1993\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2491\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3245\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"7\"\u003eNote: This table provides a summary of descriptive statistics for various metrics, including the total observations (N), mean, standard deviation (STD), and the 25th (p25), 50th (median), and 75th (p75) percentiles for each variable, showcasing the distribution\u0026apos;s breadth. Variable definitions can be found in Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n \u003cp\u003eTable\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e3\u003c/span\u003e employs a Pearson\u0026apos;s correlation matrix to examine the interplay between corporate governance, financial performance, and operational metrics. Key findings include a positive correlation between board diversity (BCs_Diversity) and Return on Invested Capital (ROIC), indicating that diversity enhances investment efficiency. Furthermore, larger companies and those with higher market value have higher board diversity. There is an inverse relationship between the board committee\u0026rsquo;s diversity and TQ. Financial measures such as ROIC, ROCE, ROE, and ROA show complex associations with other measures, highlighting the complexity of corporate financial and governance interconnections. Liquidity shows a positive association with TQ but a negative association with other variables, highlighting its complex role in financial evaluations. To tackle potential multicollinearity, which could deviate from the impact of predictor variables, we performed Variance Inflation Factor (VIF) tests. The results show values below 5, confirming our variables\u0026apos; independence and thus reinforcing our analysis\u0026apos;s reliability (Kutner et al., \u003cspan class=\"CitationRef\"\u003e2005\u003c/span\u003e).\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\n \u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n \u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n \u003ctable id=\"Tab3\" border=\"1\"\u003e\n \u003ccaption\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 3\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eCorrelation Matrix\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eVariables\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e1\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e2\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e3\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e4\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e5\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e6\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e7\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e8\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e9\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e10\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e11\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e12\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e13\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(1) BCs_Diversity\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(2) ROIC\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.223*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(3) ROCE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.046\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.207*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(4) ROE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.184*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.379*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.271*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(5) ROA\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.257*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.460*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.051\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.480*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(6) TQ\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.127*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.123*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.347*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.112*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.038\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(7) Size\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.440*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.033\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.230*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.049\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.072\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.494*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(8) M_Cap\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.496*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.189*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.045\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.231*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.118*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.025\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.487*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(9) PPE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.074\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.023\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.234*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.066\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.012\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.118*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.028\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.069\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(10) Capex\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.117*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.007\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.106*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.036\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.010\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.014\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.139*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.080*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.406*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(11) Cash\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.167*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.143*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.089*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.135*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.164*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.381*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.401*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.170*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.044\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.040\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(12) Exec_Tn\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.025\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.066\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.042\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.054\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.022\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.092*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.061\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.008\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.037\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.073\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.091*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(13) Board_Tn\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.110*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.093*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.029\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.064\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.038\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.114*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.119*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.051\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.085*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.087*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.084*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.357*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e1.000\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"14\"\u003eNote: The table shows Pearson\u0026apos;s correlation analysis outcomes for the study variables. Asterisks denote statistical significance at the 5% threshold.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n \u003cp\u003e\u0026nbsp;\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec10\" class=\"Section2\"\u003e\n \u003ch2\u003e4.2. Main regression results\u003c/h2\u003e\n \u003cp\u003eOur panel regression analysis (Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e4\u003c/span\u003e) examines the impact of corporate board committee diversity on different elements of corporate investment behavior, including ROIC (model 1), ROCE (model 2), and ROE (model 3). The analysis shows how board committees\u0026apos; diversity affects corporate investment decisions. Diversity within board committees significantly increases ROIC (coefficient\u0026thinsp;=\u0026thinsp;0.7826). This suggests that higher diversity within boards is linked to higher investment returns. This advocates that diverse perspectives contribute to more effective investment decisions, reinforcing the findings of Carter et al. (\u003cspan class=\"CitationRef\"\u003e2010\u003c/span\u003e), who evidence that board diversity positively impacts firm value by broadening decision-making perspectives.\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\n \u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n \u003cdiv class=\"colspec\" align=\"left\"\u003e\u0026nbsp;\u003c/div\u003e\n \u003ctable id=\"Tab4\" border=\"1\"\u003e\n \u003ccaption\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 4\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eBoard Committee Diversity and Corporate Investment Behavior\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eVariables\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e(1)\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e(2)\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e(3)\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eBCs_Diversity\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.7826***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0008\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0583**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.1687)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.2397)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0247)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eROA\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.7503***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0506\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0700***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0583)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0828)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0085)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eTQ\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.2805\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3690\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0751**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.2449)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.3481)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0359)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eSize\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2905**\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0217\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0066\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.1305)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.1854)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0191)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eM_Cap\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2287***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0970\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0581***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0713)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.1013)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0105)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003ePPE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-1.2143***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-1.6194***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.1201**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.3848)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.5471)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0565)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCapex\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0121**\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0046\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0013\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0061)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0086)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0009)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCash\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.5375\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0875\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0373\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.3496)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.4970)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0513)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eExec_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.2852\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0427\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0556\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.3677)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.5227)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0539)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eBoard_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.4709\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.1650\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0772*\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.3144)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.4468)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0461)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eConstants\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-7.8653***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e2.1707*\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.2953**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.8274)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(1.1762)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.1214)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYear, Firm \u0026amp; Industry FE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eObservations\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eAdjusted R\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3714\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.6241\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2424\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"4\"\u003eNote: This table outlines findings from panel regression analyses exploring the impact of board committee diversity (BCs_Diversity) on corporate investment behavior. It delves into investment efficiency (via ROIC in Model 1), return on capital employed (ROCE in Model 2), and return on equity (ROE in Model 3). The analyses incorporate year, firm, and industry fixed effects and apply robust standard errors clustered by firm. Symbols ***, **, and *, denote statistical significance at the 1%, 5%, and 10% thresholds, respectively, with p-values in parentheses. Variable definitions are detailed in Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n \u003cp\u003eHowever, the impact of diversity is not consistent across all dependent variables. Despite both ROIC and ROE benefit from diversity, with ROE displaying a moderate positive coefficient of 0.0583, the ROCE does not show a significant association. This shows that board diversity substantially impacts strategic and long-term investment decisions rather than short-term operational efficiency. Day-to-day company operations more directly influence operational efficiency and are less affected by board governance. The variation in impact highlights the critical role of board diversity in shaping different aspects of corporate investment behavior. Board committees benefit from diverse backgrounds and skills, leading to better problem-solving. This approach can develop fresh and cautious investment strategies (Harjoto et al., \u003cspan class=\"CitationRef\"\u003e2018\u003c/span\u003e), leading to higher return on invested capital (ROIC) and return on equity (ROE). Our findings show that having diverse boards enhances the quality of decision-making, especially in areas directly affected by these strategic decisions, rather than in immediate operational efficiencies. This supports the argument made by Bernile et al. (\u003cspan class=\"CitationRef\"\u003e2018\u003c/span\u003e), who discovered that diversity within corporate boards plays a key role in reducing financial volatility and enhancing decision-making.\u003c/p\u003e\n \u003cp\u003eOther control variables also reveal significant findings. For example, Return on Assets (ROA) demonstrates a robust and positive connection with both Return on Invested Capital (ROIC) and Return on Equity (ROE). This suggests that effective asset allocation enhances investment and equity returns. Conversely, investments in Property, Plant, and Equipment (PPE) have a negative effect on investment outcomes across all models. This indicates that allocating more capital to tangible assets like PPE may not always lead to improved investment results. The M_Cap and Capex are significant factors in financial analysis. M_Cap has a positive relationship with both ROIC and ROE. Meanwhile, Capex has a modest positive impact on ROIC. This reflects the complexity of market perception and investment strategies\u0026apos; impacts on corporate returns.\u003c/p\u003e\n \u003cp\u003eOur analysis highlights the complex relationship between board committee diversity and corporate investment behavior while pointing to the complex nature of investment decision-making procedures within corporations.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec11\" class=\"Section2\"\u003e\n \u003ch2\u003e4.3. Additional analysis- Investment efficiency\u003c/h2\u003e\n \u003cp\u003eBuilding on McNichols and Stubben (\u003cspan class=\"CitationRef\"\u003e2008\u003c/span\u003e) work on corporate investment behavior, our study expands its analysis by incorporating additional measures of investment efficiency. Theoretically, firms should invest in all projects with a positive net present value (NPV) until the marginal benefits meet the marginal costs (Hayashi, \u003cspan class=\"CitationRef\"\u003e1982\u003c/span\u003e). Corporate investment decisions are strategically aimed at boosting competitive advantage and financial performance, primarily through enhanced investment efficiency (Attig et al., \u003cspan class=\"CitationRef\"\u003e2016\u003c/span\u003e). This is crucial for making well-informed investment choices and improving a firm\u0026rsquo;s overall strategic and financial health.\u003c/p\u003e\n \u003cp\u003eMeasuring corporate investment efficiency involves assessing a firm\u0026apos;s ability to select projects with positive net present values (NPVs), a key indicator of financially sound investments (Gomariz \u0026amp; Ballesta, \u003cspan class=\"CitationRef\"\u003e2014\u003c/span\u003e). Although no direct measure exists, the method by McNichols and Stubben (\u003cspan class=\"CitationRef\"\u003e2008\u003c/span\u003e) is an early attempt to quantify optimal investment levels. Their model identifies deviations from expected investment levels, shown as error terms, as indicators of inefficiency. We adopt this model to determine optimal investment levels and use deviations as efficiency indicators. Predicting future corporate investment involves assessing growth opportunities through the market-to-book value of assets (Q) and cash flow (CF), aligning investments with strategic goals. Our approach includes aggregating each firm\u0026apos;s total investment\u0026mdash;research and development, capital expenditure, and acquisitions, adjusted by selling property, plant, and equipment\u0026mdash;and normalizing it against the prior year\u0026apos;s total assets. We estimate this investment model cross-sectionally by year and industry, allowing for a comprehensive analysis of investment behavior across sectors and over time. Corporate investment efficiency is measured from the model\u0026rsquo;s residuals, where negative residuals indicate underinvestment and positive ones suggest overinvestment. To put these residuals in a positive light, we multiply their absolute values by -1; higher values thus indicate higher efficiency. This method helps evaluate how closely a firm\u0026rsquo;s investment actions match optimal levels. For detailed calculations and assumptions, see Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/p\u003e\n \u003cdiv id=\"Equ2\" class=\"Equation\"\u003e\n \u003cdiv id=\"FileID_Equ2\" class=\"mathdisplay\"\u003e$$\\:{Investment}_{i,t}=\\:{\\beta\\:}_{0}+{\\beta\\:}_{1}{Q}_{i,t}+{\\beta\\:}_{1}{CF}_{i,t}+{\\epsilon\\:}_{it}$$\u003c/div\u003e\n \u003cdiv class=\"EquationNumber\"\u003e2\u003c/div\u003e\n \u003c/div\u003e\n \u003cp\u003eOur regression analysis, as depicted in Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e5\u003c/span\u003e, explores the impact of diversity within corporate board committees on corporate investment efficiency. The findings highlight the significant influence of board committees\u0026apos; diversity, identified through the diversity index (BCs_Diversity), on enhancing corporate investment efficiency, with a positive and statistically significant coefficient of 0.0180 (p\u0026thinsp;\u0026lt;\u0026thinsp;0.05). This finding demonstrates the importance of diverse perspectives in refining investment decisions and resource allocation. Our findings highlight how diversity in the board\u0026rsquo;s viewpoints can enhance the quality of investment decisions. Our findings extend the findings of Carter et al. (\u003cspan class=\"CitationRef\"\u003e2010\u003c/span\u003e), which state that board diversity enhances firm valuation in the market by extending the range of viewpoints in decision-making processes.\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\n \u003ctable id=\"Tab5\" border=\"1\"\u003e\n \u003ccaption\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 5\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eAdditional Analysis: Corporate Investment Efficiency\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003eVariables\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e(1)\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eBCs_Diversity\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0180**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0081)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eROA\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0008\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0057)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eTQ\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0084\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0108)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eSize\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0096**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0048)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eM_Cap\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0006\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0028)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003ePPE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0470***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0142)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCapex\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0064***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0005)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eCash\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0367*\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0205)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eExec_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0346\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0249)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eBoard_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0449**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0203)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eConstants\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.1122***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0353)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYear, Firm \u0026amp; Industry FE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eObservations\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eAdjusted R\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3469\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"2\"\u003eNote: This table presents additional analysis focusing on the influence of board committee diversity (BCs_Diversity) on corporate investment efficiency. The analyses incorporate year, firm, and industry fixed effects and apply robust standard errors clustered by firm. Symbols ***, **, and *, denote statistical significance at the 1%, 5%, and 10% thresholds, respectively, with p-values in parentheses. Variable definitions are detailed in Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n \u003cp\u003eThe analysis of the other control variables shows that larger firms have more efficient investments. On the other hand, higher capital expenditures are linked to lower efficiency, pointing to overinvestment or inefficient capital use. Similarly, higher liquidity negatively impacts investment efficiency, recommending lower disciplined investment decisions in cash-rich companies. Additionally, longer board tenure is positively associated with investment efficiency, indicating the benefits of experienced board members (Harjoto et al., \u003cspan class=\"CitationRef\"\u003e2018\u003c/span\u003e). However, longer executive tenure does not show a significant positive effect. Furthermore, a strong positive relationship between Property, Plant, and Equipment (PPE) spending and efficiency highlights the importance of managing tangible assets effectively.\u003c/p\u003e\n \u003cp\u003eOur results support our hypothesis that the diversity of board committees significantly affects corporate investment efficiency. These results expand the existing literature on corporate governance by highlighting the strategic significance of board diversity in influencing effective investment choices. Our study showcases the necessity of integrating diverse viewpoints at the decision-making level to enhance corporate investment outcomes and overall firm performance.\u003c/p\u003e\n\u003c/div\u003e\n\u003cdiv id=\"Sec12\" class=\"Section2\"\u003e\n \u003ch2\u003e4.4. Robustness test- Endogeneity analysis\u003c/h2\u003e\n \u003cp\u003eWe perform additional tests to validate the robustness of our main results. These analyses include using alternative measures of corporate investment efficiency, endogeneity, and sensitivity. Our study\u0026apos;s term \u0026apos;endogeneity\u0026apos; refers to the potential correlations between explanatory variables and the model\u0026rsquo;s error term, which can stem from omitted variables, measurement errors, or simultaneous causality. In the following sections, we outline the results of these analyses.\u003c/p\u003e\n \u003cp\u003eTo tackle the potential endogeneity issue commonly encountered in research concerning corporate governance and investment behavior, we employ robust methodologies inspired by Petrenko et al. (\u003cspan class=\"CitationRef\"\u003e2016\u003c/span\u003e) and Ham et al. (\u003cspan class=\"CitationRef\"\u003e2017\u003c/span\u003e). These methods aid in alleviating concerns regarding reverse causality and omitted variables. Despite the use of firm- and year-fixed effects in our panel regression analysis to control for unobserved heterogeneity, to further strengthen our results, we use an Instrumental Variable (IV) approach, following prior literature (Gholami et al., \u003cspan class=\"CitationRef\"\u003e2022\u003c/span\u003e). We introduce an instrument for board committees\u0026apos; diversity (BCs_Diversity), benchmarked against industry standards (Alt_BCs_Diversity_In), to generate a variable standardized across sectors. Standardization includes adjusting BCs_Diversity by the sector mean and standard deviation, ensuring comparability across different sectors.\u003c/p\u003e\n \u003cdiv id=\"Equa\" class=\"Equation\"\u003e\n \u003cdiv id=\"FileID_Equa\" class=\"mathdisplay\"\u003e$$\\:Alt\\_BCs\\_Diversity\\_In=\\frac{BCs\\_Diversity-mean\\:BCs\\_Diversity}{SD}$$\u003c/div\u003e\n \u003c/div\u003e\n \u003cp\u003eIn the first stage, we regress our endogenous variable, Alt_BCs_Diversity_In, along with other exogenous control variables to estimate its predicted values (panel A in Table\u0026nbsp;\u003cspan class=\"InternalRef\"\u003e6\u003c/span\u003e). In the second stage, we use the predicted values of board diversity (Pre_BCs_Div) to assess the impact on corporate investment. We evaluate this impact across all three models (ROIC, ROCE, and ROE). Panel B presents the second stage least squares (2SLS) regression results, focusing on the effect of predicted board diversity (Pre_BCs_Div) on three key investment metrics. The analysis reveals that predicted board diversity has a substantial and statistically significant positive effect on ROIC with a coefficient of 0.8739 (p\u0026thinsp;\u0026lt;\u0026thinsp;0.01). This supports the notion that higher levels of board diversity can significantly enhance investment efficiency. However, the results for ROCE and ROE are mixed, with a non-significant impact on ROCE (coefficient of 0.0663) and a moderately significant favorable influence on ROE (coefficient of 0.0536, p\u0026thinsp;\u0026lt;\u0026thinsp;0.05).\u003c/p\u003e\n \u003cdiv class=\"gridtable\"\u003e\n \u003ctable id=\"Tab6\" border=\"1\"\u003e\n \u003ccaption\u003e\n \u003cdiv class=\"CaptionNumber\"\u003eTable 6\u003c/div\u003e\n \u003cdiv class=\"CaptionContent\"\u003e\n \u003cp\u003eRobustness Tests: Instrument variable (IV) method\u003c/p\u003e\n \u003c/div\u003e\n \u003c/caption\u003e\n \u003cthead\u003e\n \u003ctr\u003e\n \u003cth colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003ePanel a: First Stage of Measuring Predicted Values\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\u0026nbsp;\u003c/th\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003cth colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eVariables\u003c/p\u003e\n \u003c/th\u003e\n \u003cth align=\"left\"\u003e\n \u003cp\u003e(1)\u003c/p\u003e\n \u003c/th\u003e\n \u003c/tr\u003e\n \u003c/thead\u003e\n \u003ctbody\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eAlt_BCs_Diversity_In\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2848***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0079)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eROA\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0902***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0159)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eTQ\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0898***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0278)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eSize\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0551***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0125)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eM_Cap\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0120\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0080)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003ePPE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0598**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0293)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eCapex\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0037***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0013)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eCash\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.1026*\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0587)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eExec_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0897\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0703)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eBoard_Ten\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e-0.0716\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0581)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eConstants\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e3.0637***\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0931)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eYear FE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eObservations\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"3\" align=\"left\"\u003e\n \u003cp\u003eAdjusted R\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.7732\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e\u003cstrong\u003ePanel B: 2SLS Regression Results\u003c/strong\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e\u003cstrong\u003e(1)\u003c/strong\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e\u003cstrong\u003e(2)\u003c/strong\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e\u003cstrong\u003e(3)\u003c/strong\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003ePre_BCs_Diversity\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.8739***\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0663\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.0536**\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\u0026nbsp;\u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.19063)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.2708)\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e(0.0281)\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYear FE\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eYes\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eObservations\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e682\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003ctr\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003eAdjusted R\u003csup\u003e2\u003c/sup\u003e\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.3707\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.6241\u003c/p\u003e\n \u003c/td\u003e\n \u003ctd align=\"left\"\u003e\n \u003cp\u003e0.2392\u003c/p\u003e\n \u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tbody\u003e\n \u003ctfoot\u003e\n \u003ctr\u003e\n \u003ctd colspan=\"4\"\u003eNote: This table presents robustness test outcomes via the Instrumental Variable (IV) method. Panel A executes a first-stage regression with an alternate board committee\u0026rsquo;s instrument (Alt_BCs_Diversity_In), showing its predictive capability. Panel B advances with Second Stage Least Squares (2SLS) regression analyses, utilizing these forecasts to evaluate diversity\u0026apos;s effect in three models. Year, firm, and industry effects are considered in both panels, with significance denoted by ***, **, and *, representing the 1%, 5%, and 10% levels, respectively. Variable definitions are available in Appendix \u003cspan class=\"InternalRef\"\u003eA\u003c/span\u003e.\u003c/td\u003e\n \u003c/tr\u003e\n \u003c/tfoot\u003e\n \u003c/table\u003e\n \u003c/div\u003e\n \u003cp\u003eThese IV test results validate the robustness of our primary analysis and significantly emphasize the influence of board committees\u0026apos; diversity in shaping corporate investment strategies. By applying the IV approach to ensure standardization across industries and address endogeneity concerns, our study highlights the critical role of board diversity in enhancing corporate governance and strategic investment decision-making, aligning with our main study\u0026apos;s overarching conclusions.\u003c/p\u003e\n\u003c/div\u003e"},{"header":"5. Conclusion","content":"\u003cp\u003eThis study investigates the impact of diversity within corporate board committees on investment behavior among firms listed on the ASX 300 in the Australian stock market. We examine aspects such as the presence and size of key strategic committees (sustainability, audit, nomination, executive board, risk, and remuneration), gender representation, the inclusion of independent members, and the proportion of non-executive directors. Our research, employing panel regression models, robustness tests, and instrumental variable methods, underscores the significant role of board committee diversity in shaping corporate investment decisions.\u003c/p\u003e \u003cp\u003eOur findings indicate that greater diversity within board committees enhances corporate investment decision-making and improves outcomes. This supports the notion that diverse perspectives improve investment decisions, echoing Carter et al. (\u003cspan citationid=\"CR19\" class=\"CitationRef\"\u003e2010\u003c/span\u003e), who found that board diversity positively influences firm value by broadening decision-making perspectives. However, the effect of board diversity varies across different investment measures. It has a more substantial impact on long-term and strategic decisions, as demonstrated by its influence on Return on Invested Capital (ROIC) and Return on Equity (ROE), compared to short-term operational metrics like Return on Capital Employed (ROCE). Typically, these short-term metrics are more relevant to day-to-day management, while long-term decisions are tied to board-level governance.\u003c/p\u003e \u003cp\u003eOur results suggest that while board committee diversity improves decision-making quality, its benefits are more noticeable in areas influenced by strategic decisions rather than immediate operational efficiency. This aligns with Bernile et al. (\u003cspan citationid=\"CR16\" class=\"CitationRef\"\u003e2018\u003c/span\u003e), indicating that committees' diversity indirectly influences board decisions. As argued by Dellaportas et al. (\u003cspan citationid=\"CR24\" class=\"CitationRef\"\u003e2022\u003c/span\u003e) and Smyth et al. (\u003cspan citationid=\"CR76\" class=\"CitationRef\"\u003e2022\u003c/span\u003e), cross-disciplinary research helps uncover the complex and situational nature of diversity, as different components of committee diversity affect decisions differently. Our findings suggest that diverse board committees reduce financial risk and volatility while improving decision-making quality. Our additional analysis highlights the importance of diverse committee perspectives in refining investment decisions and improving resource allocation, ultimately enhancing investment efficiency.\u003c/p\u003e \u003cp\u003eThis research makes several contributions to the existing literature on corporate governance and investment efficiency. Firstly, it provides empirical evidence that board committee diversity enhances decision-making quality and financial returns through more strategic investment choices. This broadens our understanding of how board diversity and overall committee diversity similarly influence outcomes, particularly in long-term strategic decisions versus short-term operational efficiencies. It offers a fresh perspective on how committee diversity can be more effectively utilized in corporate governance. Additionally, our study provides practical insights for companies, particularly those listed on the ASX 300, on structuring their board committees to boost investment efficiency. By incorporating diverse perspectives, companies can achieve more informed and strategic decision-making processes. Furthermore, by clarifying how overall board committee diversity affects various investment decisions, this research lays the groundwork for future studies to explore these dynamics across different sectors and cultural contexts, potentially leading to tailored governance strategies. Finally, the diversity within each committee, depending on its membership, may have varying effects on reducing financial risk, improving decision-making quality, and enhancing profitability. Future research can investigate whether the diversity within individual committees influences these factors differently. Moreover, examining the impact of diversity in voluntary committees, such as the sustainability committee, can address complex and critical issues Lukka and Becker (\u003cspan citationid=\"CR57\" class=\"CitationRef\"\u003e2023\u003c/span\u003e) identified, such as the role of diversity in environmental and social decision-making. Future research into corporate social and environmental activities, particularly those involving gender and other diversity components, is recognized by Maran et al. (\u003cspan citationid=\"CR59\" class=\"CitationRef\"\u003e2023\u003c/span\u003e) and supported by theoretical reflections from Reilley and L\u0026ouml;hlein (\u003cspan citationid=\"CR72\" class=\"CitationRef\"\u003e2023\u003c/span\u003e), as essential for understanding the diversity and complexity of individuals' roles within board committees.\u003c/p\u003e"},{"header":"Declarations","content":"\u003ch2\u003eAuthor Contribution\u003c/h2\u003e\u003cp\u003eA.A. led the conceptualisation and manuscript preparation. L.D., J.L., and J.S. contributed to the literature review, data analysis, and interpretation. R.B. provided critical revisions and theoretical insights. All authors reviewed and approved the final manuscript.\u003c/p\u003e"},{"header":"References","content":"\u003col\u003e\u003cli\u003e\u003cspan\u003eAdams RB, Akyol AC, Verwijmeren P (2018) Director skill sets. 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Crit Perspect Acc 86:102481. \u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://doi.org/https://doi.org/10.1016/j.cpa.2022.102481\u003c/span\u003e\u003cspan address=\"10.1016/j.cpa.2022.102481\" targettype=\"DOI\" class=\"RefTarget\"\u003e\u003c/span\u003e\u003c/span\u003e\u003c/span\u003e\u003c/li\u003e \u003cli\u003e\u003cspan\u003eUgwu IV, Ekwochi EA, Ogbu CG (2021) A critical study of corporate risk management committee impact on firm performance. Int J Acad Inform Syst Res (IJAISR) 5(4):24\u0026ndash;39\u003c/span\u003e\u003c/li\u003e\u003c/ol\u003e"},{"header":"Footnotes","content":"\u003col\u003e\u003cli\u003e\u003cspan\u003e Corporate investment efficiency refers to the alignment between a firm\u0026rsquo;s actual investment activities and the optimal investment level expected based on the firm\u0026rsquo;s growth opportunities. This concept encompasses both over-investment, where investments exceed the optimal threshold, and under-investment, where investments fall short of what is required to fully capitalize on growth opportunities McNichols, M. F., \u0026amp; Stubben, S. R. (2008). Does Earnings Management Affect Firms' Investment Decisions? \u003cem\u003eThe Accounting Review\u003c/em\u003e, \u003cem\u003e83\u003c/em\u003e(6), 1571\u0026ndash;1603. \u003cspan class=\"ExternalRef\"\u003e\u003cspan class=\"RefSource\"\u003ehttps://doi.org/10.2308/accr.2008.83.6.1571\u003c/span\u003e\u003cspan address=\"10.2308/accr.2008.83.6.1571\" targettype=\"DOI\" class=\"RefTarget\"\u003e\u003c/span\u003e\u003c/span\u003e .\u003c/span\u003e\u003c/li\u003e\u003c/ol\u003e"}],"fulltextSource":"","fullText":"","funders":[],"hasAdminPriorityOnWorkflow":false,"hasManuscriptDocX":true,"hasOptedInToPreprint":true,"hasPassedJournalQc":"","hasAnyPriority":false,"hideJournal":true,"highlight":"","institution":"","isAcceptedByJournal":false,"isAuthorSuppliedPdf":false,"isDeskRejected":"","isHiddenFromSearch":false,"isInQc":false,"isInWorkflow":false,"isPdf":false,"isPdfUpToDate":true,"isWithdrawnOrRetracted":false,"journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true},"keywords":"","lastPublishedDoi":"10.21203/rs.3.rs-6597429/v1","lastPublishedDoiUrl":"https://doi.org/10.21203/rs.3.rs-6597429/v1","license":{"name":"CC BY 4.0","url":"https://creativecommons.org/licenses/by/4.0/"},"manuscriptAbstract":"\u003cp\u003eThis study examines how diversifying board committees\u0026ensp;influence corporate investment behavior, specifically in decision-making and allocation strategies. By committee presence, size, gender representation, and independent and non-executive members, we build a detailed diversity index using data\u0026ensp;on these committees. Our findings show that higher diversity substantially enhances the quality of long-term strategic investment decisions compared to short-term operational efficiencies. Additional investigations have shown that more diversity maximizes corporate resource allocation, generating optimal investment and investment efficiency levels. These findings highlight the strategic importance of diversity as a contributor to good governance and better\u0026ensp;financial performance.\u003c/p\u003e","manuscriptTitle":"Board Committee Diversity and Corporate Investment Behaviour","msid":"","msnumber":"","nonDraftVersions":[{"code":1,"date":"2025-06-16 06:01:31","doi":"10.21203/rs.3.rs-6597429/v1","editorialEvents":[{"type":"communityComments","content":0}],"status":"published","journal":{"display":true,"email":"[email protected]","identity":"researchsquare","isNatureJournal":false,"hasQc":true,"allowDirectSubmit":true,"externalIdentity":"","sideBox":"","snPcode":"","submissionUrl":"/submission","title":"Research Square","twitterHandle":"researchsquare","acdcEnabled":true,"dfaEnabled":false,"editorialSystem":"","reportingPortfolio":"","inReviewEnabled":false,"inReviewRevisionsEnabled":true}}],"origin":"","ownerIdentity":"5d0cf413-a4b9-498e-bad6-bc31a944d1b6","owner":[],"postedDate":"June 16th, 2025","published":true,"recentEditorialEvents":[],"rejectedJournal":[],"revision":"","amendment":"","status":"posted","subjectAreas":[{"id":50054002,"name":"Business and commerce/Business and management"},{"id":50054003,"name":"Social science/Finance"}],"tags":[],"updatedAt":"2025-07-09T11:08:44+00:00","versionOfRecord":[],"versionCreatedAt":"2025-06-16 06:01:31","video":"","vorDoi":"","vorDoiUrl":"","workflowStages":[]},"version":"v1","identity":"rs-6597429","journalConfig":"researchsquare"},"__N_SSP":true},"page":"/article/[identity]/[[...version]]","query":{"redirect":"/article/rs-6597429","identity":"rs-6597429","version":["v1"]},"buildId":"8U1c8b4HqxoKbykW_rLl7","isFallback":false,"isExperimentalCompile":false,"dynamicIds":[84888],"gssp":true,"scriptLoader":[]}