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School of Business | Department of Accounting | Accounting | 2014
Thesis number: 13619
Who nominates the board? - Implications on board diversity and turnover
Author: Viskari, Milla
Title: Who nominates the board? - Implications on board diversity and turnover
Year: 2014  Language: eng
Department: Department of Accounting
Academic subject: Accounting
Index terms: laskentatoimi; accounting; corporate governance; corporate governance; johtaminen; management; hallitukset; boards of directors; päätöksenteko; decision making
Pages: 95
Key terms: corporate governance; board of directors; diversity; turnover; nomination committee; director selection; hallitus; monimuotoisuus; vaihtuvuus; nimitysvaliokunta; hallituksen valinta
This thesis assesses whether the type of nomination poses implications on board diversity in terms of age, gender, nationality and education, as well as turnover on a Finnish and Swedish data. The existing research on director selection and especially nomination committees is rather limited, and thus the research aims at contributing to the topic.

The reviewed time period concerns 2008 to 2012, and altogether 55 Finnish and 55 Swedish public companies are included in the study, thus resulting in a sample size of 550 for diversity and 440 for turnover analyses. In 48 of these firms the board is nominated by the board or its subcommittee, and in the remaining 62 by a shareholders' nomination committee. The selected firms represent a variety of industries and sizes. The diversity and turnover data was mainly collected from the companies' annual reports, and financial figures from the Orbis database. Statistical methods were employed to assess the relationships between the variables.

The results suggest that the nomination method has a significant effect on total board diversity, where shareholder nominated boards are more likely to possess higher degrees of diversity. Likewise, evidence was found that having a shareholder nominated board contributed to a higher likelihood of diversification regarding age, gender and nationality, but not education. Despite of these results, board size was still a stronger indicator of diversity. In addition, ownership concentration was linked to an increased likelihood of educational diversity, and lower national diversity. On the contrary, no support was found regarding nomination type's influence on board turnover. Commonly employed explanatory factors, such as company performance, CEO change as well as board size, on the other hand, displayed expected association with turnover. Subtle indications regarding the contribution of ownership dispersion, presence of over 65 year old directors as well as majority shareholder change on turnover were further detected.
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