Age diversity, directors′ personal values, and bank performance

This study examines the effects of board diversity on bank profitability and risk. Using a sample of 97 Chinese banks over a period from 2009 to 2013, we find that board age diversity is negatively associated with bank profitability. To further investigate why age-diverse boards influence bank performance, we decompose board age diversity into diversity of directors′ personal values, utilizing the World Values Survey. Our findings suggest that the heterogeneity among directors′ views on risk, prudence, and wealth is more likely to spark intragroup conflicts in the decision-making process. This prevents the board from functioning effectively and ultimately weakens bank profitability. Our results are robust with respect to alternative measures of diversity and bank performance.