Beyond the legal-financial approach: cognitive diversity of the board of directors and company performance: literature review
Abstract
Cognitive diversity of the Board of Directors has become omnipresent in discussions on corporate governance. It is part of a new approach to governance whose objective is to overcome the shortcomings of the traditional conception of governance and to take into account the cognitive aspects and the creative potential of the board in improving corporate performance.
The objective of this article is to investigate academic research that studied the possible relationship between cognitive diversity of the Board of Directors and performance. It turns out that the results identified through this work are mixed. Indeed, several empirical studies confirm the existence of a positive link between the cognitive diversity of the board of directors and the various performance measures such as ROA, ROE and Tobin's Q by emphasizing that cognitive diversity improves the quality of strategic decisions and strengthens innovation. However, other studies question this relationship and strongly qualify the importance of the presumed link following the appearance of conflicts and cognitive biases.
KeyWords: Board of directors, Cognitive governance, Cognitive diversity, Performance.
JEL Classification: G34, M14.
Paper type : Theoretical Research.
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Article under license : CC-BY-NC-ND