Board diversity and firm risk-taking in the tourism sector: Moderating effects of board independence, CEO duality, and free cash flows. Issue 7 (November 2022)

• Record Type: Journal Article
• Authors: Ozdemir, Ozgur; Erkmen, Ezgi; Binesh, Fatemeh
• Is Part Of: Tourism economics. Volume 28:Issue 7(2022)
• Page Start: 1782
• Page End: 1804
• Publication Date: 2022-11
• Subjects: board diversity -- board independence -- CEO duality -- free cash flows -- risk-taking; Tourism -- Periodicals; 338.4791
• DOI: 10.1177/13548166211014367
• Languages: English
• ISSNs: 1354-8166

Abstract

This study examines the effect of board diversity on risk-taking for tourism firms and analyzes the moderating effect of board independence, CEO duality, and free cash flows in this proposed relationship. Using a composite index of board diversity and a sample of tourism firms from the US hotel, restaurant, and airline industries, we find that greater board diversity leads to lower risk-taking, measured in standard deviation of return on assets. Moreover, we report that the risk-reduction effect of board diversity is more profound when tourism firms have less board independence and less free cash flows for investments. When board diversity is decomposed into relation-oriented and task-oriented diversity attributes, we find that only the task-oriented diversity is influential in reducing firm risk-taking for tourism firms. Akin to main analysis, the board independence and free cash flows are significant moderators of the relationship between task-oriented diversity and firm risk-taking.