Three Types of Age Diversity in Boards of Directors and the Relationship to Firm Performance

Sammanfattning: The composition of boards of directors has been a subject for debate the recent years. Theory and previous research are not coherent regarding the relationship between age diversity and firm performance. Past research has measured diversity in different ways, which may be the reason for the inconsistent results. The aim of this study is to explain the relationship between firm performance and age diversity as separation, variety and disparity in Swedish boards of directors. The sample consists of all Swedish companies listed on OMX Large Cap, Mid Cap and Small Cap Stockholm during 2011-2015. The relationship between the three types of diversity and firm performance, measured as Tobin’s Q, were tested with a regression analysis. The statistical results from the regression analysis showed significantly negative relationship between firm performance and age diversity as separation, variety and disparity. Thus, this study concludes that from a business perspective it is preferable for Swedish listed firms to have less age diversified boards of directors. However, whether diversity is good for other purposes is still a question for future research to examine. This study contributes to close the research gap with the comprehensive measurement of age diversity and its relationship to firm performance.