Corporate Board Diversity- A functional approach for its assessment

Board diversity is an important mechanism of corporate governance in order to ensure the efficacy of the management and monitoring actions. A large number of empirical studies and the European Commission identify board diversity as an important indicator of success for international corporate practice. Although many indices have been proposed, no universally accepted measure for diversity has yet been established. A possible solution is the diversity profile because it displays a family of indices in a single graph. In this paper we propose to extend this concept, largely used in ecology, in the economic field. In particular, we apply functional data analysis to the beta diversity profile. The proposed approach inspects the complex concept of biodiversity, highlighting its multidimensional aspect. More in detail, our research focuses on functional data analysis of variance in order to quantify the effects exerted on functional diversity by regional environment in Italian medium-large firms.