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Borsa Istanbul Review 21-3 (2021) 209e226
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Full Length Article

Board age and value diversity: Evidence from a collectivistic and

paternalistic culture*
Emrah Arioglu
Cukurova University, IIBF Isletme Bolumu, Balcali, Adana, 01330, Turkey
Received 4 May 2020; revised 15 October 2020; accepted 15 October 2020
Available online 20 October 2020

Abstract

The current study investigates whether board age diversity affects company financial performance and risk, and whether diverse work-related
values held by directors of different ages are the underlying cause of any effects via a sample of listed companies from Turkey, which has a
collectivistic and paternalistic culture. In order to investigate these effects, various 2 Stage Least Squares Instrumental Variables models are
employed. In addition, to investigate through which channels age diversity may affect company performance, directors' personal values are also
considered via propensity score matching. Even though directors’ values are not observable, it is assumed that their ages reflect their values. For
this purpose, the current study utilizes the World Value Survey data. The findings suggest that board age diversity has a positive effect on both
company performance and risk, but do not suggest that intra-group conflicts in terms of work-related values are the underlying causes of this
positive effect.
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Copyright © 2020, Borsa Istanbul Anonim Şirketi. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-
ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

JEL classification: G34; J16; M14

Keywords: Age diversity; Board of directors; Director values; Corporate governance; Borsa Istanbul

1. Introduction political, economic and cultural events and changes, such as

coups, financial crises or changes towars free-market orien-
Board age diversity is an important dimension of board- tation. As a consequence of such events and changes, directors
room diversity. Yet there is limited research on age diversity of different ages who grew up in different environments in
compared to other dimensions of diversity in boardrooms. terms of politics, economic-orientation or culture, might hold
Director age matters because it is an important proxy for a diverse values, and have experiences that could adversely
director's decision-making process in the work-place. It can affect their collective decision-making process in boardrooms
also reflect director values. Board age diversity could be (Talavera, Yin, & Zhang, 2018). After all, one could expect
considered especially important in countries that have gone specific historical events in a country to have a strong impact
through significant transformations in a relatively short period on the values of individuals of different ages in general, but
of time. These transformations could be a result of significant more importantly, on their values regarding work
(Cherrington, Condie, & England, 1979).
*
Research on board age diversity benefits from various
I would like to thank the anonymous reviewers and the editor Ali Kutan theories such as agency theory, resource dependency theory
for their valuable comments. In addition, I would like to thank Metin Borak,
Nuran Cos‚kun, Jeremy Dawson, Taieb Hafsi, Kenan Lopcu, Yildirim Beyazit
and human capital theory. These theories point to the potential
Onal, Mustafa Ozbilgin, Oleksandr Talavera, Koray Tuan, Azmi Yalcin, Ann benefits that a more diverse board could provide, among which
Young, Mahbub Zaman and Mao Zhang for their valuable comments and help. are increased creativity, improved problem-solving skills, the
E-mail address: [email protected]. existence of different points of views, a better understanding
_
Peer review under responsibility of Borsa Istanbul Anonim Şirketi.

https://doi.org/10.1016/j.bir.2020.10.004
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2214-8450/Copyright © 2020, Borsa Istanbul Anonim Şirketi. Production and hosting by Elsevier B.V. This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).
E. Arioglu _
Borsa Istanbul Review 21-3 (2021) 209e226

of diverse markets, improved skill sets and experiences, and a characterized by low collectivism, such as the US, the UK, or
greater number of external connections (García-Meca, García- some other European countries.1 In a recent study, Karolyi
Sanchez, & Martínez-Ferrero, 2015; Macey & O'Hara, 2003). (2016) states that “Scholarship in finance has paid relatively
However, diversity in boardrooms could also lead to potential little attention to the role of culture in financial decision-
costs as a result of conflicts, communications problems, and making compared to other business disciplines and eco-
bias against out-of-group members (Ruigrok, Peck, & nomics”, highlighting the potential role of culture in financial
Tacheva, 2007). Thus, diversity in corporate boards could be decision-making process and calling for more research on
considered a double-edged sword that would affect the culture and finance. Thus, this study investigates whether the
outcome of various corporate policies such as financing, in- effects of director age diversity on company performance and
vestments, dividends and remuneration, which in turn would risk differ in a collectivistic society compared to more indi-
be reflected in company performance. These outcomes natu- vidualistic societies, based on the premise that cultures that are
rally affect investors' reluctance to invest in stock markets, characterized as more collectivistic would not value diversity
which has direct consequences on the allocation of an as highly as more individualistic cultures. In addition, in
economy's scarce resources to stock markets, affecting any cultures that are more paternalistic, older team members might
economy as a whole. This situation is vital for emerging not value the opinions of younger members of teams at any
economies that are more desperately in need of these funds to level. Therefore, teams that consist of members from different
boost economic growth. age groups might not function as effectively in paternalistic
Even though diversity in boardrooms could have these cultures as they do in cultures that are not paternalistic. Thus
important consequences on various corporate policies, the the cultural setting of Turkey provides a valuable out-of-
number of studies that investigate the potential effects of de- sample setting to investigate whether board age diversity has
mographic diversity in emerging markets is limited (Ararat, an effect on company performance. This is one of the con-
Aksu, & Cetin, 2015). In addition, director age diversity has tributions of this study.
attracted even less attention compared to other diversity di- More importantly, in addition to the performance and risk
mensions, not only in emerging markets but also in more implications, this study also investigates the value-based
developed markets. Lastly, studies that investigate the value channels through which director age diversity could affect
channels through which board age diversity could impact company performance. Since the culture of an organization is
company performance are very rare (Talavera et al., 2018). mainly shaped by the values of top level decision-makers, such
This study aims to help augment this line of research. as top executives and board members, and since these values
The current study investigates the potential effects of board determine human behavior (Askun, Oz, & Askun, 2010),
age diversity on company financial performance, as well as the organizational outcomes such as corporate decisions are
value channels through which the effects on performance naturally influenced by these individuals' values and attitudes.
could exist, via a sample of public companies quoted at the Therefore, it is important to investigate whether the diversity
Borsa Istanbul between the years 2009 and 2017. The findings of values held by these top level decision-makers are associ-
demonstrate that board age diversity has a positive effect on ated with corporate outcomes. There is only one study that
company performance and risk. However, it does not appear investigates value-based channels through which director age
that intra-group conflicts in values are the underlying causes of diversity could affect company performance, conducted by
the negative effect on company performance. Talavera et al. (2018). In that study, the authors investigate the
As stated earlier, director age diversity has not attracted topic via a sample of Chinese banks. However, China has a
wide attention in finance literature, especially in the case of much larger economy compared to Turkey (according to
emerging markets. The existing literature mostly focuses on World Bank data) and is culturally very different compared to
firm performance implications of board age diversity for more Turkey in terms of Hofstede's cultural dimensions.2 In addi-
developed countries in North America or Europe. Compared to tion, the dynamics of decision-making and the way top-
these countries, Turkey has a societal culture characterized by management teams function in the banking industry differ
high collectivism according to Hofstede's cultural dimensions substantially cofrom the way top-management teams function
(Ararat et al., 2015). Individuals from cultures that are char- in other industries due to much stricter regulations that
acterized as more collectivistic could be more likely to make banking industries are subject to around to world. Thus, the
sharper distinctions between in-group and out-group members, findings of a study focused on the potential effects of values on
and they might not value diversity as highly as those from company performance via director age diversity that is con-
more individualistic cultures. The members of these collec- ducted on Chinese banks, and other studies to be conducted on
tivistic cultures might have strong regard for conformity, and
deviations from norms might not be welcomed (Jonsen,
Maznevski, & Schneider, 2011). This, in turn, could lead to 1
Turkey's score for individualism is 37, whereas the scores for the US and
conflicts between in- and out-of-group members, potentially the UK are 89 and 91, respectively, according to www.hofstede-insights.com
leading to negative outcomes in various corporate issues. (as of December 31st, 2018).
2
According to www.hofstede-insights.com, China's scores for power dis-
Therefore, the effects of board age diversity in Turkish com- tance, individualism, masculinity, uncertainty avoidance, long term orienta-
panies could differ from the effects in companies that are tion, and indulgence are 80, 20, 66, 30, 87 and 24, respectively. The same
quoted on stock markets of more developed countries scores for Turkey are 66, 37, 45, 85, 46 and 49, respectively.

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more developed countries in the future, might possibly not These potential benefits, however, should be considered
apply to the Turkish case. In addition, in the last 40 years alongside possible disadvantages of a diverse board, such as
Turkey has gone through very significant political changes, conflicts and communication problems, flawed cooperation,
such as the 1980 coup, the 1997 “post-modern” coup, and the and biases against out-of-group members (Ruigrok et al.,
2016 coup “attempt”, and economic changes, such as the 1980 2007). According to the social identity theory, self-
transformation to a liberal economy and the 2001 trans- categorization and stereotyping could be harmful to group
formation to the floating exchange rate regime. It is possible functioning (Ali et al., 2014). After all, members of teams
that these significant changes could have affected the values could be expected to prefer working with, trusting, and
held by individuals from different age groups in Turkey, cooperating more with group members that they consider
among which are company board members. The current study similar to themselves, and therefore would be less likely to
could provide valuable insight into understanding whether the differentiate themselves from “the others” (van Knippenberg,
diversity of values of directors of different ages could have Dawson, West, & Homan, 2011). Such potential conflicts
company performance consequences in a setting that is sub- could be expected to occur more frequently in collectivistic
stantially different than economically more developed coun- cultures compared to more individualistic cultures (Jonsen
tries with different cultural dimensions and with more political et al., 2011).
and economic stability. This is the main contribution of the There are numerous studies investigating the relationship
current study. between board diversity and company performance and value.
The results are mixed. For instance, in two of the earliest
2. Theory and research questions studies, Carter et al. (2003) and Erhardt, Werbel, and Shrader
(2003) find a positive relationship between board diversity
2.1. Board diversity and company performance and value. Yet in another study,
Carter, D’Souza, Simkins, and Simpson (2010) report that they
Board diversity literature benefits from multiple theories. are not able to find a relationship between gender or ethnic
According to agency theory, the board is an important diversity and company performance. In another study,
corporate governance mechanism for mitigating manager- Anderson, Reeb, Upadhyay, and Zhao (2011) show that board
shareholder conflicts. A diverse board can help improve the heterogeneity has a positive correlation with company perfor-
monitoring effectiveness of the board of directors as a result mance dependent on the complexity of the environment of the
of different points of views and perspectives, as well as the company. Ararat et al. (2015) demonstrate that board de-
valuable experience and knowledge that diverse directors can mographic diversity (not age diversity in particular) has a
provide (García-Meca et al., 2015). In addition, these diverse positive and non-linear relationship with company performance.
directors could potentially be more independent and would In addition, García-Meca et al. (2015) show that while gender
be more likely to ask “out-of-the-box” questions compared to diversity improves bank performance, nationality diversity in-
more traditional directors. Still, it is possible that diverse hibits bank performance.
directors might not lead to more effective monitoring since Various studies investigate the effects of board diversity on
they might be marginalized (Carter, Simkins, & Simspon, corporate issues other than company performance. Masulis,
2003). According to resource dependence theory, the suc- Wang, and Xie (2012) show that companies with foreign di-
cess of a company depends on the external environment, and rectors make better acquisitions, yet these foreign directors are
a diverse board could provide access not only to valuable more likely to have poorer attendance records and are associated
external networks and contacts, but also to capital and reg- with an increased likelihood of intentional financial misreporting.
ulators (Macey & O'Hara, 2003). Finally, according to Ben-Amar et al. (2013) show that there is a negative relationship
human capital theory, a diverse board increases creativity and between board demographic diversity and merger and acquisition
innovation in the boardroom, which helps board members to performance that becomes positive as demographic diversity
better understand a diverse marketplace and the industry levels go beyond a certain threshold, indicating that the rela-
through the skills, knowledge, and experiences of diverse tionship is not linear. Hafsi and Turgut (2013) report a positive
directors (Carter et al., 2003). In addition, a diverse board relationship between “diversity in boards” and the social per-
could signal to the job market the commitment of a company formance of companies. Ararat et al. (2015) show that board di-
to diversity, and thus be helpful in attracting skillful in- versity has a positive effect on board monitoring intensity. Estelyi
dividuals from diverse backgrounds (Ali, Ng, & Kulik, and Nisar (2016) find a positive relationship between board di-
2014). versity (in terms of the nationalities of directors) and companies’
These theories suggest that diversity in boardrooms would international market operations.
not only improve the effectiveness of boards in terms of their
monitoring functions, but also through their advisory func- 2.2. Board age diversity and company financial
tions, since the diversity of experiences could lead to improved performance
strategic decision-making. This advising-based point of view
highlights the importance of directors’ mentoring and coun- Before considering the potential positive and negative ef-
seling skills, in addition to their monitoring skills (Ben-Amar, fects of director age diversity on company financial perfor-
Francoeur, Hafsi, & Labelle, 2013). mance, it is important to discuss how the behavior of older and
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younger individuals, including directors, might differ. First of and company performance. Talavera et al. (2018) report a
all, it is possible that as individuals get older, their cognitive negative relationship between age diversity and bank perfor-
abilities could deteriorate. In the case of directors, their mo- mance. García-Meca et al. (2015) demonstrate that diversity in
tivations could change as they get older, compared to when boardrooms might have different effects on company perfor-
they were younger, and they might become more likely to mance based on the dimension of diversity, such as gender or
maintain the status quo (Waelchli & Zeller, 2013). On the nationality. However, Ararat et al. (2015) are unable to find a
other hand, according to the managerial signaling hypothesis, statistically significant relationship between board age di-
motivated by reputation concerns, younger directors would be versity and company performance.
expected to show their worth to the market and thus, be more As the previous discussions illustrate, it is not easy to hy-
aggressive and risk-taking. The market learning hypothesis, pothesize whether board age diversity would affect company
however, suggests the opposite, positing that younger performance in a positive or negative way. However, Turkey has
decision-makers might behave more conservatively in order to gone through substantial changes in recent decades. Therefore,
avoid riskier decisions that could have negative consequences it is quite likely that there are vital differences in terms of
and adversely affect the market's perception of their skills (Li, values and attitudes held by directors that are substantially
Low, & Makhija, 2017). In addition, younger directors could different in age. In addition, potential conflicts arising due to
be more familiar with newer technologies, whereas older di- diversity of values are more likely to occur in collectivistic
rectors could provide boardrooms with stability and wisdom cultures compared to more individualistic cultures (Jonsen
(Ali et al., 2014). From a social responsibility point of view, et al., 2011). Thus, the hypothesis in the current study is:
younger directors might be more sensitive in terms of ethical
Hypothesis 1. There is a negative relationship between board
and environmental issues (Hafsi & Turgut, 2013). Lastly, older
age diversity and company financial performance.
individuals might not be as energetic as younger individuals,
may have more problems getting along with co-workers, and
might value time spent with family more than time spent
working, since they may be less motivated at work than 2.3. Board age diversity and company risk
younger employees (Ng & Feldman, 2008).
Although directors of different ages would have behaviors As individuals get older, their appetite for risk may change.
that differ when considering directors as a group, these varying For instance, Bucciol and Miniaci (2011) and Grable, McGill,
behaviors could lead to value creation. As is the case with other and Britt (2009) demonstrate that individuals' risk tolerances
dimensions of board demographic diversity, board age diversity decline as they get older. Therefore, one could expect that board
in corporate boards could also produce: (i) more effective age diversity could have potential effects on the riskiness of
monitoring, (ii) more effective strategic group decision-making corporate decisions as a consequence of directors of different
process (Ali et al., 2014), (iii) improved board connections and ages having different attitudes towards risk. Cheng, Chan, and
expertise (Talavera et al., 2018), and (iv) an enhanced knowl- Leung (2010) find that younger managers are more likely to
edge base and greater creativity in boardrooms (Ben-Amar make riskier decisions to signal their worth to the market.
et al., 2013). While these factors could lead to improved Similarly, Berger, Kick, and Schaeck (2014) argue that risk-
company performance, board members might consider other taking would decrease with an individual's age, in support of
board members as outsiders if they are demographically the managerial signaling hypothesis. However, when career
different (Estelyi & Nisar, 2016). Thus, the presence of board concerns of managers are considered, Li et al. (2017) argue that
members with different perspectives and cognitive skills (as a younger managers would be more risk-averse due to the po-
result of substantial age differences) might result in potential tential negative impact of their decisions on their future careers.
communication problems and conflicting views, hindering the Older managers, on the other hand, would not have similar
decision-making process of a board and disrupting team process concerns because of their cumulative human capital. This is in
and performance (van Knippenberg et al., 2011). As a result, line with the market learning hypothesis supported by the evi-
board age diversity could have both positive and negative ef- dence in Gormley and Matsa (2016).
fects on company performance. Empirical studies investigating this issue provide mixed
The findings of empirical studies on this subject are mixed. findings. While Gormley and Matsa (2016) report that younger
For instance, Kim and Lim (2010) show that the diversity of CEOs are more likely to be risk-averse in investment (acquisition)
independent directors’ age has a positive effect on company decisions, Li et al. (2017) find that CEOs that are younger are
value. Mahadeo, Soobaroyen, and Hanuman (2012) find a more likely to enter new lines of businesses and to undertake
positive relationship between age diversity and company bolder investment decisions compared to older CEOs. On the
performance. In addition, Nguyen et al. (2015) report that the other hand, Bertrand and Schoar (2003) demonstrate that older
age of executives has a positive effect on shareholder wealth managers are more conservative, and Berger et al. (2014) find that
for a sample of executive appointments to US banks via an younger executive teams increase portfolio risks. The conflicting
event study. On the other hand, Hagendorff and Keasey (2012) theory and evidence about attitudes towards risk again makes it
find that bank board age diversity is associated with wealth clear that the issue is an empirical one. Yet, it is possible that the
losses around acquisition announcements. Ali et al. (2014) presence of younger directors on boards (increased board age
demonstrate a negative relationship between age diversity diversity) might increase the risk appetite of company boards as a
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whole compared to boards that consist of only older directors that Individuals go through changes in their personalities and
are likely to be more risk-averse. Therefore, the hypothesis is as cognition throughout their life spans. Therefore, individuals of
follows: different ages, even in the same culture, may have different
values. For instance, as individuals get older, they become more
Hypothesis 2. There is a positive relationship between board
conservative and less tolerant (Cornelis, Van Hiel, Roets, &
age diversity and company risk.
Kossowska, 2009). By becoming less tolerant, it is possible
that these older individuals could be less tolerant of the opin-
ions and ideas of younger individuals in the same group, such as
2.4. Board value diversity and company financial a company board of directors. These differences could lead to
performance potential conflicts among the members of age-diverse groups.
In addition, in their professional careers, members of recent
Culture and values matter substantially at the corporate generations could also have different attitudes, values, and
level. Values could shape an individual's psychology and guide expectations towards work compared to generations before
that individual's behavior (Breuer, Hens, Salzmann, & Wang, them (Ng, Schweitzer, & Lyons, 2010). This view is supported
2015). Thus, values are important determinants of economic by evidence in Cennamo and Gardner (2008). For instance, as
decisions of individuals, which could also affect the economic individuals get older, it is possible that they might consider the
decisions made by the organizations that they are a part of. moral importance of work more highly and financial in-
After all, it is not companies that make decisions, but top centives for success in work less (Cherrington et al., 1979). In
executives and directors that do. Therefore, human elements, a boardroom context, a group of directors who place varying
such as these individuals' values and beliefs, would play degrees of importance on work might not be able to operate in
important roles in various company outcomes (Adhikari & harmony. In addition, older directors could be more conser-
Agrawal, 2016; Frijns, Dodd, & Cimerova, 2016). vative and cautious when making decisions, whereas younger
Empirical evidence provided by Breuer et al. (2015) sug- directors could be more risk-seeking. Also, individuals of
gests values have a significant effect on attitudes towards substantially different ages might have different attitudes to-
economic decisions. In addition, Hilary and Hui (2009) and wards (and expectations of) in-group communications as well
McGuire, Omer, and Sharp (2012) demonstrate that there is a as different levels of comfort in working as a team (Myers &
positive relationship between local religiosity in the provinces Sadaghiani, 2010). Consequently, these individuals might be
of the headquarters of companies and risk aversion in com- critical of in-group members that do not share the same values,
pany culture. Frijns et al. (2016) find that national cultural whereas directors of similar ages may consider each other
diversity has a negative effect on company performance. more “alike” in terms of values and find it easier to interact
Bryan, Nash, and Patel (2015) provide empirical evidence (Ali et al., 2014). This, in turn, would lead to enhanced
demonstrating that differences in national cultures influence cooperation in groups of directors of similar ages. When
the differences in executive compensation structures across groups include directors of different ages, personal values
countries. Kogut and Singh (1988) find that culture has an could be more likely to differ among members,3 and disparate
effect on companies’ acquisition method choices. Similarly, values have the potential to give rise to disagreements and in-
Ahern, Daminelli, and Fracassi (2015) demonstrate that cul- group conflicts in boardrooms (Talavera et al., 2018). Even
tural differences between target and acquiring companies in- though discussing company matters from different points of
fluence the outcomes of cross-border mergers and acquisitions. view could lead to the identification of more effective strate-
Lo Turco and Maggioni (2018) provide empirical evidence gies, it is also possible that value-oriented conflicts could be
suggesting that commonality of cultural values, such as reli- counter-productive, making teamwork and coordination more
gious beliefs, can have an important impact on the trade re- difficult (Ahern et al., 2015) and leading to impaired decision-
lationships of companies by relaxing informational barriers making, resulting in lowered company performance. In a
and favoring reciprocal trust. Aggarwal, Kearney, and Lucey collectivistic culture, such negative effects could be expected
(2012) demonstrate that the commonality of culture in the to outweigh the positive effects. Based on these arguments and
form of common religion between international trade partners the fact that Turkey has a collectivistic culture according to
counteracts the potential negative influence of cultural and Hofstede's value dimensions, the hypothesis is:
geographic distances between these partners on trade re-
Hypothesis 3. There is a negative relationship between board
lationships. Hutzschenreuter and Voll (2008) also demonstrate
value diversity and company financial performance.
that cultural distance between countries is an important
determinant of the success of multinational companies in their
international expansion strategies.
These studies demonstrate the importance of culture and
3
values on various economic and corporate outcomes, and lead In untabulated results, a simple t-test in terms of the differences of in-
one to ask whether diversity of values within the group context dividuals that responded to the World Value Survey Turkey (2012) supports
this hypothesis. The mean value of the Work value dummy variable for in-
is associated with corporate outcomes. Age is one of such dividuals that are in the top 75% in terms of age is 0.84, whereas it is 0.76 for
essential underlying reasons that can lead to conflicts of values individuals that are in the low 25%. The difference of the means of this var-
with-in groups. iable for these two groups has a t-value of 2.86 (p ¼ 0.004).

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3. Data and methodology literature. These variables are winsorized at the 1% and 99%
levels to isolate the potential effects of any extreme
3.1. Data observations.5
The proxy for company risk is Leverage, which is calcu-
The sample consists of companies quoted at the Borsa lated in such a manner that it reflects the riskiness of a com-
Istanbul between the years 2009 and 2017. The year 2009 is pany's financing choices which are made by boards of
chosen as the start date since annual reports of companies are directors. Following Faccio, Marchica, and Mura (2016), it is
not publicly available via the Public Disclosure Platform (PDP) calculated as the ratio of financial debt to the sum of financial
of Turkey and the majority of companies’ annual reports are not debt and equity, where financial debt is the sum of short-term
accessible via other official resources before 2009. Companies loans and long-term debt excluding other non-current liabil-
that were delisted during the sample period remain in the ities. A higher leverage indicates higher risk, since the impact
sample to prevent any survivorship bias. Finally, financial of a shock would be greater on a company's net profitability
companies, such as banks, factoring companies, leasing com- when the leverage of the company is higher.
panies, and insurance companies are excluded from the sample Two age diversity variables are calculated as proxies for the
because the financial structures and the financial report formats independent variables of main interest. The first age diversity
of these companies are different compared to companies that variable, Board Age Diversity, is calculated by dividing the
are non-financial. This leaves us with a final sample of 2279 ratio of the standard deviation of age of a company's board
company-years and 15,842 director-years. members by the mean age of the company board members.
Corporate governance data related to directors and com- The second age diversity variable, LnSDAge, is the natural
panies are hand-collected via the annual reports of companies. logarithm of the standard deviation of age of a company's
Non-corporate governance data related to directors and com- board members. Both variables are calculated following
panies are accessed via Finnet, which is one of the official data Talavera et al. (2018).
providers of the Borsa Istanbul. The main variable of interest is
Age, which is the age of a director in years. Corporate gover- 3.2. Descriptive statistics
nance variables included in various model specifications are (i)
Board Size, which is the total number of directors on the board The descriptive statistics for the variables discussed thus
of a company, (ii) Independent Director %, which is the ratio of far are presented in Table 1. Table 1 shows that the mean
independent directors to the total number of directors on the values for ROE and ROA are 0.050 and 0.033, respectively.
board of a company, (iii) Female Director %, which is the ratio The mean value for leverage is 0.326. In addition, the table
of female directors to the total number of directors on the board shows that companies in the sample have on average 6.95
of a company, and (iv) BIG4, which is a dummy variable that board members, with 23.6% of them being independent and
takes the value of 1 if a company is audited by one of the big 12.9% being female. Of the companies in the sample, 53%
four independent audit companies and 0 otherwise. As previous are audited by one of the Big 4 independent audit companies.
studies, such as Guest (2009), Rutledge, Karim, and Siyu The mean total asset size is 2771 million Turkish Liras. The
(2016), Arioglu (2020a) and Tepalagul and Lin (2015), relatively high standard deviation, which is 15,702 million
demonstrate, these variables could affect company financial Turkish Liras, reflects multiple companies with very large
performance and value directly or indirectly. Variables that are total asset sizes. The mean value for the natural logarithm of
included in various model specifications as control variables are company age is 3.387, whereas 56.6% of the companies are
(i) Size, which is the natural logarithm of the sales of a com- headquartered in Istanbul. In terms of the main variable of
pany, (ii) Company Age, which is the natural logarithm of the interest, age diversity, the mean value for Board Age Di-
difference between the current year and the year that the versity is 0.186, whereas the mean LnSDAge value is 2.202.
company was founded, and (iii) Istanbul, which is a dummy In untabulated results, it is observed that the mean director
variable that takes the value of 1 if the company's headquarters age is 55.11 years with a standard deviation of 11.92. The
are located in the city of Istanbul and 0 otherwise. Lastly, minimum director age is 19 while the maximum director age
discretionary current accruals (DCA) is the discretionary is 100.6
component of current accruals.4 In models that use company
performance as dependent variables, these variables are
employed as independent variables alongside other diversity
measures that are explained in the following paragraphs.
In various models, company performance is captured by 5
Regression results that employ ROA are reported to save space. When
return on assets (ROA) and return on equity (ROE), which ROE is employed in regressions, parallel results are obtained.
6
are standard performance measures employed in finance In untabulated results, it can be observed that only the correlation values
between ROE and ROA, and between the two age diversity variables are
extremely high. However, since they are alternatives measures and are never
4
Arioglu (2020b) demonstrates that DCA, which is an earnings manage- employed simultaneously, this does not cause any concerns. The Pearson
ment proxy, is associated with company performance. The details of the correlation values between the independent variables and performance and risk
estimation procedure for DCA according to the Turkish accounting system is variables are not higher than 0.53 suggesting that multi-collinearity should not
discussed in greater detail in Arioglu (2020b). be of concern (Gujarati, 2004, p. 259).

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Table 1 among the members of that organization who are from

Descriptive Statistics. The table presents the descriptive statistics for com- different generations (Parry & Urwin, 2011). The underlying
pany variables utilized throughout the study. The sample covers the period
between the years 2009 and 2017, with 15,842 director-years and 2279
rationale for such an argument is that individuals from specific
company-years of data. ROE is the return on equity. ROA is the return on generations experience similar and significant life events at
assets. Leverage is the measure of company leverage to proxy for company critical developmental stages throughout their lives
risk as defined in the text. Independent Director % is the ratio of independent (Kupperschmidt, 2000), and while they are likely to share
directors to the total number of directors on a board. Size is the total number of similar values (including work-related values) with individuals
directors on a board. Female Director % is the ratio of female directors to the
total number of directors in a board. BIG4 is a dummy variable, which takes
from the same generations, they are also likely to have
the value of 1 if a company is audited by one of the big four independent audit different values than individuals from other generations
companies. Assets is the natural logarithm of the total assets. Ln (Company (Gursoy, Maier, & Chi, 2008). Members of the same genera-
Age) is the natural logarithm of company age. Istanbul is a dummy variable tion are born in similar years, and this limits them to a certain
that takes the value of 1 if the company's headquarters is located in the city range of life experiences that leads them to have certain mode
Istanbul. Board Age Diversity is the ratio of the standard deviation of age of
the company board members by the mean of the age of the company board
of thoughts and values (Parry & Urwin, 2011). Significant
members. LnSDAge is the natural logarithm of the standard deviation of age of economic events, such as financial crises or changes towards
the company board members. The value diversity variable is the ratio of the free-market orientation, are especially likely to lead in-
standard deviation of a value of the company board members divided by the dividuals of the same generation to share collective memories
mean of the value of the company board members. Extreme observations for that shape their work-related values (Cherrington et al., 1979).
various variables are winsorized at 1% and 99% values.
Further, Holdbrook and Schindler (1994) argue that in-
N Mean Standard Deviation dividuals that are in adolescence or young adulthood during
Panel A: Performance & Risk Variables specific and substantial national events would form a shared
ROE 2203 0.050 0.226 memory of such events, and therefore, such events would lead
ROA 2203 0.033 0.080
Leverage 2184 0.326 0.245
them to have similar attitudes and behavior. Such similarity
Panel B: Control Variables would be easier to observe especially in work-place-related
Independent Director % 2279 0.236 0.151 attitudes and behavior. For instance, Filipczak (1994) argues
Size 2279 6.952 2.112 that Generation X witnessed their parents being made redun-
Female Director % 2279 0.129 0.144 dant, and such observations shaped the members of Generation
BIG4 2279 0.530 0.499
Assets 2247 a
2771 a
15,702
X's perceptions of work in a manner that they have a tendency
Ln (Company Age) 2268 3.387 0.594 to consider each job as a temporary job and each company
Istanbul Dummy 2279 0.566 0.496 they work at as a stepping stone to another job.
Panel C: Age Diversity Variables Combined with the generational effects just discussed, age-
LnSDAge 2172 2.202 0.523 related effects also matter for work-related value differences
Board Age Diversity 2174 0.186 0.080
Panel D: Value Diversity Variables
among board members. Age effects are changes that affect
Value Diversity e Work 2132 0.052 0.022 individuals as they get older and more mature (Rhodes, 1983).
Value Diversity e Risk 2132 0.251 0.137 Therefore, it is not only the year that an organization member
Value Diversity e Creativity 2132 1.052 1.544 was born, but also her age that governs her work place atti-
Value Diversity e Relaxed 2132 0.071 0.037 tudes and behavior. For instance, Polach (2007) argues that
Value Diversity e Traditional 2132 0.021 0.009
Value Diversity e Competitive 2132 0.366 0.163
while an individual considered in her “midlife ages” desires
Value Diversity e Heavy Worker 2132 1.218 4.885 leadership opportunities and the pressure “to have it all”, an
a
Figures are denoted in Million Turkish Liras.
individual considered in her “legacy ages” would be likely to
keep what has been earned.
Empirically, Sessa, Kabacoff, Deal, and Brown (2007)
demonstrate that managers from different generations value
3.3. Methodology: World Value Survey and director different characteristics in management, and that they behave
values differently in work-place. Similarly, Cennamo and Gardner
(2008), Chen and Choi (2008), Gursoy et al. (2008) and
To investigate through which channels age diversity may Lamm and Meeks (2009) find that there are significant dif-
affect company performance, directors' personal values are ferences in terms of work values between individuals from
also considered. Even though directors’ values are not different generations. Lyons, Duxbury, and Higgins (2007)
observable, it is assumed that their ages reflect their values. find that individuals from different generations have
For this purpose, this study utilizes the World Value Survey different values in terms of traditionalism and conservatism.
(WVS) data following Talavera et al. (2018). Before Yet, there are also studies that are unable to find work-related
describing the methodology employed in more detail, it is value differences among individuals from different genera-
important to discuss why such a methodology is chosen in the tions, such as Parker and Chusmir (1990), Jurkiewicz and
current study. Brown (1998), Jurkiewicz (2000), and Appelbaum, Serena,
There is extensive literature which argues that generational and Shapiro (2005).
differences in an organization lead to a diversity of attitudes What matters in the context of the current study is that
and behaviors arising from differences in work-related values differences in work-related values of board members on the
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same board could lead to serious conflicts in a group setting level with a caliper distance set as 0.05% without replacement,
(Karp & Sirias, 2001). As Parry and Urwin (2011) discuss, producing respondents that are similar to the directors in the
different generations are likely to consider different economic sample with regard to age, gender, and education level. The
resources as important, and this would naturally lead to inter- results of the propensity score matching are presented in Table
generational conflict. As discussed above, not only genera- 2. The table shows that before the matching, the mean values
tional differences but also age differences matter for in- of age, gender, and education levels for the entire director
dividuals’ work-related values, and such differences can also sample compared to the entire WVS Turkey 2012 respondents
lead to intra-group conflicts in a board setting. show statistically significant differences. However, after pro-
Based on these arguments, the current study utilizes WVS pensity score matching, the directors in the matched director
data to create proxies for boardroom work-related value di- subsample and the individuals in the matched WVS Turkey
versity. Even though it is debatable to utilize WVS re- 2012 respondent subsample are indistinguishable in terms of
spondents’ answers to various work-related value questions, age, gender, and education levels.
the main assumption underlying the methodology chosen in Next, by using a logit model to regress age, gender, and
the current study (supported by arguments discussed above) is education level of the respondents that are matched via pro-
that individuals from similar generations and ages are likely to pensity score matching on the “work” value variable, the co-
have similar work-related values as a result of shared collec- efficients for age, gender, and education level variables are
tive memories. predicted for the respondents of the matched VWS Turkey
Getting back to the details of the methodology, a total of 14 2012 subsample. The logit model employed is:
value indicators that are extracted from WVS Turkey (2012)
are tested as potentially related to age. The value indicators P(Vi,j ¼ 1) ¼ F(a þ b*Agej þ c*Genderj þ d*Education
that could be expected to be related to directors’ attitudes Levelj þ ε) (1)
towards work are: work, wealth, success, prudence, risk,
creativity, determination, relaxed, helpful, traditional, In the above specification, Vi,j takes the value of 1 if the
obedient, unhappy, heavy worker, and competitive. Before respondent j's response has the value of 1 for the value variable
testing whether these indicators are related to director age, “work” and 0 otherwise. Age is stated in years, whereas
each indicator is scaled so that value variables created based Gender is a dummy variable that takes the value of 1 for males
on these indicators are binary variables.7 0 for females. Education Level is a dummy variable that takes
Next, in order to determine which value variables are the value of 1 for individuals with at least a bachelor's degree
affected by age, separate logit models are employed to predict and 0 otherwise. The coefficients for these three variables
the probability of an individual holding each value. For predict whether the main variable of concern, age, has a sta-
instance, for the value variable “work”, important de- tistically significant association with value variable “work”.8
mographic and sociological variables such as age, gender, This procedure is repeated for the 14 value variables noted
education level, employment status, and income level are earlier. Of the 14 value variables, 7 appear to have a statisti-
gathered along with the binary “work” variable from the WVS cally significant relationship with age: work, risk, creativity,
Turkey 2012. Then, the director sample is matched with the relaxed, traditional, heavy worker, and competitive. For the
respondents of the WVS Turkey 2012 via propensity score variable “work”, age has the coefficient 0.0164 with a p-value
matching. It is assumed that directors in the sample are of 0.000; for the variable “risk”, age has the coefficient 0.0169
employed and have high-income levels. Therefore, before with a p-value of 0.000; for the variable “creativity”, age has
matching, the WVS Turkey 2012 is restricted to individuals the coefficient 0.0112 with a p-value of 0.002; for the variable
with high-income levels who are employed. As a result, “relaxed”, age has the coefficient 0.0152 with a p-value of
variability in income and employment is eliminated. The 0.002; for the variable “traditional”, age has the coefficient
matching is performed based on age, gender, and education 0.0127 with a p-value of 0.041; for the variable “heavy
worker”, age has the coefficient 0.0104 with a p-value of
0.042; and for the variable “competitive”, age has the coeffi-
7 cient 0.0112 with a p-value of 0.003.
For this purpose, answers to the questions with 6 potential response cat-
egories such as “very much like me”, “like me”, “somewhat like me”, “a little
Next, for each of these 7 value variables, the age, gender
like me”, “not like me” and “not at all like me” are recorded as dichotomies for and education level of the directors in the sample are
each individual. “Very much like me” and “like me” take the value 1, and the employed in separate logit models (based on the model (1)) by
remaining categories take the value 0. Answers to the questions with 4 po- utilizing the coefficients predicted for the respondents of the
tential response categories such as “very important”, “rather important”, “not matched VWS Turkey 2012 subsample. As a result, scores for
very important”, and “not at all important” are recorded so that “very
important” and “rather important” take the value 1 and the remaining cate-
the 7 value variables are predicted for each director in the
gories take the value 0. Answers to the questions that ask individuals the level sample each year. Lastly, value diversity variables for com-
at which they agree with a statement based on a scale from 1 to 10 (with 10 pany boards are calculated for each of the 7 variables by
being “completely agree”) are recorded so that “9” and “10” take the value 1
and the remaining categories take the value 0. Answers to the questions that
8
ask individuals the level that they agree with a statement based on a scale from To ensure that the value variable is affected by only age and not the other
1 to 10 (with 1 being “completely agree”) are recorded so that “1” and “2” take variables, the value variables that have a statistically significant relationship
the value 1 and the remaining categories take the value 0. with age, but not the other variables, are chosen as the relevant value variables.

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Table 2
Mean Difference Test between Variables for the Propensity Score Matched Sample and the Entire Sample e Propensity Score Matching. The table presents
the mean difference tests between the matched sample (based on propensity score matching) and the entire sample. The director sample is matched with the
respondents of the WVS Turkey 2012 via propensity score matching. The matching is performed based on age, gender and education level with a caliper distance
set as 0.05% without replacement, producing respondents that are similar to the directors in the sample with regard to age, gender, and education level. Each
variable in the table is defined in Table 1. The sample covers the period between the years 2009 and 2017.
Entire Sample Comparisons Matched Sample Comparisons
Unmatched Directors Unmatched Respondents t-value Matched Directors Matched Respondents t-value
Age 55.11 34.28 ***-34.07 38.36 37.88 0.57
Gender 0.87 0.75 ***-6.80 0.70 0.73 0.71
Education 0.86 0.29 ***-31.88 0.44 0.47 0.55
*, **, and *** denote significance at 10%, 5%, and 1% significance, respectively.

Table 3 Table 4
Effects of Age Diversity on Company Performance - OLS. The table pre- Effects of Age Diversity on Company Performance e Firm Fixed Effects.
sents the results of pooled OLS regressions, where the dependent variables are The table presents the results of firm fixed effects regressions, where the
ROA. Board Age Diversity is the standard deviation of age of the company dependent variables are. Board Age Diversity is the standard deviation of age
board members divided by the mean age of the company board members. of the company board members divided by the mean age of the company board
LnSDAge is the natural logarithm of the standard deviation of age of the members. LnSDAge is the natural logarithm of the standard deviation of age of
company board members. Independent Director % is the ratio of independent the company board members. Independent Director % is the ratio of inde-
directors to the total number of directors on a board. Size is the total number of pendent directors to the total number of directors on a board. Size is the total
directors on a board. Female Director % is the ratio of female directors to the number of directors on a board. Female Director % is the ratio of female
total number of directors in a board. BIG4 is a dummy variable that takes the directors to the total number of directors in a board. BIG4 is a dummy variable
value of 1 if a company is audited by one of the big four independent audit that takes the value of 1 if a company is audited by one of the big four in-
companies. Assets is the natural logarithm of the total assets. Ln (Company dependent audit companies. Assets is the natural logarithm of the total assets.
Age) is the natural logarithm of company age. Istanbul is a dummy variable Ln (Company Age) is the natural logarithm of company age. Istanbul is a
that takes the value of 1 if the company's headquarters is located in the city dummy variable that takes the value of 1 if the company's headquarters is
Istanbul. Extreme observations for various variables are winsorized at 1% and located in the city Istanbul. Extreme observations for various variables are
99% values. Year dummies are NOT included in the specifications. The winsorized at 1% and 99% values. Year dummies ARE included in the
standard errors are robust. t-values are reported in parentheses. specifications. The standard errors are robust. t-values (z-values) are reported
(1) (2) in parentheses.

LnSDAge 0.001 (0.25) (1) (2)

Age Diversity 0.022 (0.95) LnSDAge 0.001 (0.06)
Independent Director % 0.014 (1.25) 0.013 (1.16) Age Diversity 0.010 (0.25)
Size **0.002 (2.29) **0.002 (2.23) Independent Director % 0.013 (0.54) 0.012 (0.50)
Female Director % 0.003 (0.24) 0.005 (0.44) Size 0.001 (0.53) 0.001 (0.65)
BIG4 **0.008 (2.00) **0.008 (2.04) Female Director % 0.023 (0.76) 0.019 (0.62)
Ln (Assets) ***0.004 (3.64) ***0.004 (3.74) BIG4 0.006 (0.86) 0.007 (0.88)
Ln (Company Age) **0.007 (2.49) **0.007 (2.52) Ln (Assets) 0.001 (0.25) 0.001 (0.24)
Istanbul 0.002 (0.54) 0.002 (0.54) Ln (Company Age) 0.015 (1.00) 0.015 (1.00)
C ***-0.100 (4.41) 0.105 (4.60) Istanbul 0.006 (0.49) 0.007 (0.55)
C 0.010 (0.07) 0.006 (0.05)
N 2096 2097
R2 0.04 0.04 N 2096 2097
F 12.31 12.56 R2 0.02 0.02
*, **, and *** denote significance at 10%, 5%, and 1% significance, F 2.90 2.98
respectively. *, **, and *** denote significance at 10%, 5%, and 1% significance,
respectively.

dividing the ratio of the standard deviation of a value variable

for company board members by the mean of the value variable 3.4. Methodology: model specifications
for all company board members. As can be observed in Panel
D of Table 1, the mean values for these diversity measures are In order to investigate the relationship between board age
as follows: 0.052 for Work, 0.251 for Risk, 1.052 for Crea- diversity and company performance, the current study first
tivity, 0.071 for Relaxed, 0.021 for Traditional, 0.366 for employs pooled ordinary least squares (OLS) models, with age
Competitive, and 1.218 for Heavy Worker.9 diversity proxies in separate models alongside the control
variables mentioned earlier. The pooled OLS models can be
stated as below:
9
In untabulated results, it can be observed that the Pearson correlation
coefficients between the value variables and the performance variables are no
Performance i,t ¼ a þ b (Age Diversity Proxy i,t) þ g (Control
higher than 0.80. It is clear that multi-collinearity is not of concern in the
models that test the relationship between the value variables and the perfor- Variables i,t) þ ε i,t (2)
mance variables.

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where Performance: ROA; Age Diversity Proxy: LnSDAge or exceptions are CapitaMosque and CapitaCourse. Yet before
Age Diversity; Control Variables: Board Size, Independent discussing why they are considered as potential instruments,
Director %, Female Director Percentage %, BIG4, Size, upper echolons theory needs to be discussed.
Company Age, and Istanbul; and Year Dummies: dummy Upper echelons theory suggests that idiosyncratic differences
variables for each year in the sample. among company executives matter. According to upper echelons
In the case that individual company effects do not exist, theory developed by Hambrick and Mason (1984), company
then employing pooled OLS models would produce consistent executives' backgrounds affect top-level corporate decisions.
and efficient parameter estimates. However, one of the core Upper echelons theory suggests that top executives' backgrounds
assumptions of pooled OLS models is regarding exogeneity, reflect key formative experiences that influence their unique
and if the regressors in the model are endogenous (which is cognitive styles, such as tolerance for ambiguity and honesty.
not uncommon in the case of the empirical association be- Differences in executives' backgrounds, experiences, values and
tween board composition variables and company perfor- cognitive styles affect how they make decisions, especially in
mance), then pooled OLS parameter estimates would be complex situations lacking clear and calculable solutions
inconsistent and biased (Bhagat & Black, 2002). The presence (Bamber et al., 2010). Simple decisions at corporations, such as
of endogeneity could even potentially lead the signs of the those related to daily working capital decisions, might have
coefficients to be estimated incorrectly (Ullah, Akhtar, & calculable solutions. However, decisions made in complex situ-
Zaefarian, 2018). In addition, unobservable company charac- ations plagued by incompatible goals might not have easily
teristics not included in pooled OLS models are likely to have calculable solutions, and therefore, might be influenced by ex-
an effect on company performance (Yermack, 1996). There- ecutives' idiosyncratic backgrounds, experiences, values and
fore, potential endogeneity-related problems arising from the cognitive styles (Hambrick, 2007). In other words, organizations
omitted unobservable company characteristics problems become reflections of their top executives, and the beliefs and
should be considered (Anderson et al., 2011). values of those individuals that make essential corporate-level
A potential remedy to overcome any such concerns is the decisions are expected to have significant influence on various
employment of firm fixed effects models. According to corporate outcomes (Abatecola & Cristofaro, 2020; Bamber,
Hausman and Taylor (1981), employing fixed effects models is Jiang, & Wang, 2010). In the Anglo-Saxon context, it is the
a common method of controlling such omitted characteristics. CEOs that matter most, since they have the highest degree of
The fixed effects models rely on a similar model specification managerial discretion due to a diffused ownership structure.
to the one in Model (2) with an additional firm-specific Especially in the case that controlling shareholders do not exist,
component that captures heterogeneities across companies. CEOs would have greater opportunities to follow their desired
Unfortunately, firm fixed effects models suffer from short- decisions and actions, and therefore would have more influence
comings as well. It is possible that, even if the omitted vari- over essential corporate actions and outcomes (Crossland &
ables problem is overcome, reverse causality could still cause Hambrick, 2011). However, as discussed in Arioglu (2020a),
significant problems in the estimation process. While it is Turkey is characterized by family companies where the chairman
possible that board age diversity can affect company perfor- is generally the founder and/or the oldest member of the family,
mance, company performance could also have an effect on the and has the highest level of managerial discretion. Therefore,
choice of directors to be nominated and elected to a company's essential corporate decisions can be expected to be influenced by
board in the consequent period. Such a possibility leads to the chairman's idiosyncratic background, experiences, values and
concerns regarding reverse causality, potentially resulting in cognitive style.
biased firm fixed effects model parameter estimates. Such Based on upper echelons theory, the current study con-
concerns are especially valid in empirical corporate structs two proxies that do not fail to be “powerful” external
governance-company performance research (Silveria, Leal, instrumental variables. Both proxies are assumed to reflect the
Carvalhal-da-Silva, & Barros, 2010; Wintoki, Linck, & conservatism levels of the provinces of birth of chairmen
Netter, 2012; Roberts & Whited, 2013). included in the sample. In addition, as supported by the test
Potential models employed in the literature to overcome results presented further in the text, both proxies are correlated
both omitted variables and reverse causality problems are 2 with the endogenous variables in the 2SLS-IV models, and are
Stage Least Squares Instrumental Variables (2SLS-IV) uncorrelated with company performance variables except
models. However, it is a well-known fact in the literature that through control variables in the models.
it is very difficult to choose valid instruments to be employed The underlying rationale for the employment of conserva-
in these models (Sila, Gonzalez, & Hagendorff, 2016) since tism levels of the provinces of birth of chairmen to reflect
they rely on external instruments that are required to be chairman values is as follows: Religious instructions generally
correlated with the endogenous variable in a model, and is begin in early childhood (Baxamusa & Jalal, 2016), and these
uncorrelated with company performance variables except instructions are usually initiated by families. Assuming that the
through control variables in the models (Adams & Ferreira, beliefs of families and the level of religiousness are influenced
2009). In untabulated results, various external instrument by the community surrounding these families, it is possible that
candidates are employed in the models in order to assess their the city of birth of an individual could potentially affect the
validity as “powerful” instruments. All of these potential in- conservativeness of an individual. Since conservatism could be
struments, except two, failed as “powerful” instruments. The associated with resistance to change, and a tendency to be more
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traditional and to make safer decisions, individuals that are instruments to investigate the relationship between company
more conservative can be expected to oppose change, which is risk and board age diversity are presented in Table 7 and Table
likely to be brought to boardrooms by younger directors (Dong, 8. The results of additional 2SLS-IV regressions run to
Li, Xie, & Zhang, 2018). Therefore, a chairman from a more investigate the relationship between company performance
conservative background (who, in Turkey, generally has the and two of the work-value diversity variables (Work and
voting power to nominate and elect board members due to the Competitive) are presented in Table 9 and Table 10. Lastly, the
common ownership structure) might prefer to elect older di- results of pooled OLS regressions run to investigate the rela-
rectors that are likely to be more conservative, as discussed in tionship between company performance and the remaining
Berger et al. (2014). This would naturally lead to lower board work value diversity variables are presented in Table 11 10.
age diversity levels in such boards. Thus, the conservatism level
of the province of birth of a chairman is expected to be nega- 4. Results
tively correlated with board age diversity, and uncorrelated with
company performance, as supported by the empirical evidence In order to investigate the relationship between board age
presented in the following sections. diversity and company performance, the current study em-
One of the conservatism proxies employed as an external ploys pooled ordinary least squares (OLS) models first. Table
instrumental variable in the current study is related to the number 3 presents the results. The Table shows that the coefficient of
of Mosques per capita in provinces. The underlying assumption is LnSDAge is 0.001 (with a t-stat of 0.25). Similarly, the coef-
that the higher the number of Mosques per capita in a province, ficient of Age Diversity is 0.022 (with a t-stat of 0.95). These
the more religious the residents of that province, on average. figures suggest that there is not a statistically significant
Specifically, CapitaMosque is the per capita number of mosques relationship between board age diversity and company
in a province in the year 2019. The number of religious in- performance.
stitutions in a geographical unit is a commonly employed proxy As explained in greater detail in the previous section,
for the level of religiosity of the residents of that geographic unit. pooled OLS parameter estimates are likely to be biased and
In terms of mosques, Lo Turco and Maggioni (2018) utilize the inconsistent if the regressors in a model are endogenous. In
number of mosques per inhabitants of a region to proxy for the order to overcome such potential problems, firm-fixed effects
religiously raised population, and empirically demonstrate that it models are also employed in the current study. The results are
is a “good” proxy for attachment to religion and traditionalist presented in Table 4. Once again, the coefficient of LnSDAge
attitudes. In terms of churches, Rossi, Barth, and Sun (2019) is 0.001 (with a t-stat of 0.06). On the other hand, when Age
employ the natural logarithm of the number of churches in a Diversity is employed in the model as the main independent
province as an instrument based on the assumption that the variable of interest with ROA as the dependent variable, it has
number of churches in a province would be correlated with reli- a coefficient of 0.010 (with a t-stat of 0.25). As is the case with
giosity in that province. Grullon, Kanatas, and Weston (2009) the employment of pooled OLS models, the parameter esti-
also measure local religiosity by the number of churches per mates derived from the firm-fixed effects model also suggest
capita in a geographic location. that there is not a statistically significant relationship between
There are religious institutions in Turkey, called Quran board age diversity and company performance.
courses, where participants are educated in reading, under- Overall, both OLS and firm-fixed effect regression results
standing, and memorizing the Quran (Ozturk, Celik, & Uyar, appear to suggest that board age diversity and company per-
2016). The other conservatism proxy employed as an formance are not statistically significantly associated. How-
external instrumental variable in the current study is related to ever, as discussed in the Methodology section, both classes of
the number of Quran courses. The underlying assumption is models suffer from serious shortcomings, such as omitted
that the higher the number of per capita Quran courses in a variables problems and reverse causality issues. And it is a
province, the more religious the residents of that province on well-known fact that issues of endogeneity can lead to
average, since more religious individuals are more likely to be inconsistent parameter estimates, and accordingly, incorrect
interested in reading, understanding, and memorizing the inferences. As a result, researchers might reach misleading
Quran. CapitaCourse is the per capita number of Quran conclusions and inappropriate theoretical interpretations
courses (legally registered courses) in a province in the year (Ullah et al., 2018). To overcome these concerns, various
2019. In a similar fashion, Lo Turco and Maggioni (2018) 2SLS-IV models with CapitaMosque and CapitaCourse as
employ the share of participants to Quran courses per prov- external instruments are employed in the current study as well.
ince as a proxy for the level of local religiosity in a province. The results of the 2SLS-IV regressions with the external
In order to investigate the effects of age diversity on instrument CapitaMosque are presented in Table 5. In col-
company performance and risk, various 2SLS-IV models are umn 1, the coefficient of Age Diversity is 0.102 (with a t-stat
employed in the current study. The external instruments are of 2.03). Similarly, the coefficient of LnSDAge is 0.586 (with
CapitaMosque and CapitaCourse. The results of the 2SLS-IV
regressions that employ these instruments to investigate the
relationship between company performance and board age 10
2SLS-IV regressions are not run with the remaining 5 value diversity
diversity are presented in Table 5 and Table 6. The results of variables since the external instruments do not pass as “powerful” instruments
the 2SLS-IV regressions that employ the same external in the models that contain those 5 variables.

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Table 5 Table 6
Effects of Age Diversity on Company Performance e 2SLS-IV: Cap- Effects of Age Diversity on Company Performance e 2SLS-IV: Cap-
itaMosque. The table presents the results of 2SLS-IV regressions, where the itaCourse. The table presents the results of 2SLS-IV regressions, where the
dependent variables are ROA. The IV is CapitaMosque. Board Age Diversity dependent variables are ROA. The IV is CapitaCourse. Board Age Diversity is
is the standard deviation of age of the company board members divided by the the standard deviation of age of the company board members divided by the
mean age of the company board members. LnSDAge is the natural logarithm mean age of the company board members. LnSDAge is the natural logarithm
of the standard deviation of age of the company board members. Independent of the standard deviation of age of the company board members. Independent
Director % is the ratio of independent directors to the total number of directors Director % is the ratio of independent directors to the total number of directors
on a board. Size is the total number of directors on a board. Female Director % on a board. Size is the total number of directors on a board. Female Director %
is the ratio of female directors to the total number of directors in a board. BIG4 is the ratio of female directors to the total number of directors in a board. BIG4
is a dummy variable that takes the value of 1 if a company is audited by one of is a dummy variable that takes the value of 1 if a company is audited by one of
the big four independent audit companies. Assets is the natural logarithm of the big four independent audit companies. Assets is the natural logarithm of
the total assets. Ln (Company Age) is the natural logarithm of company age. the total assets. Ln (Company Age) is the natural logarithm of company age.
Istanbul is a dummy variable that takes the value of 1 if the company's Istanbul is a dummy variable that takes the value of 1 if the company's
headquarters is located in the city Istanbul. Extreme observations for various headquarters is located in the city Istanbul. Extreme observations for various
variables are winsorized at 1% and 99% values. Year dummies are included in variables are winsorized at 1% and 99% values. Year dummies are included in
the specifications. The standard errors are robust. t-values (z-values) are re- the specifications. The standard errors are robust. t-values (z-values) are re-
ported in parentheses. ported in parentheses.
(1) (2) (1) (2)
IV: CapitaMosque IV: CapitaMosque IV: CapitaCourse IV: CapitaCourse
LnSDAge **0.102 (2.03) LnSDAge **0.106 (2.28)
Age Diversity **0.586 (2.28) Age Diversity ***0.501 (2.69)
Lag (ROA) ***0.549 (15.73) ***0.539 (15.81) Lag (ROA) ***0.549 (15.56) ***0.539 (16.48)
DCA ***0.324 (5.93) ***0.325 (6.31) DCA ***0.322 (6.05) ***0.334 (7.25)
Independent Director % *-0.051 (1.76) *-0.047 (1.75) Independent Director % *-0.052 (1.74) *-0.045 (1.78)
Size **-0.005 (2.10) *-0.002 (1.87) Size **-0.005 (2.27) *-0.002 (1.92)
Female Director % *-0.056 (1.89) **-0.065 (2.16) Female Director % *-0.058 (1.94) **-0.057 (2.33)
BIG4 *0.008 (1.70) *0.008 (1.81) BIG4 *0.008 (1.69) *0.008 (1.87)
Ln (Assets) 0.001 (0.44) 0.001 (1.09) Ln (Assets) 0.001 (0.42) 0.001 (1.11)
Ln (Company Age) 0.005 (1.34) ***0.012 (2.87) Ln (Company Age) 0.005 (1.30) ***0.011 (2.99)
Istanbul 0.005 (0.93) 0.005 (0.92) Istanbul 0.006 (1.02) 0.004 (0.86)
C **-0.185 (2.03) **-0.128 (2.23) C **-0.191 (2.24) **-0.112 (2.44)
N 1440 1440 N 1440 1440
F 32.50 34.49 F 31.43 38.85
Kleibergen-Paap Under-Ident. Test 7.81 (p ¼ 0.005) 11.63 (p ¼ 0.000) Kleibergen-Paap Under-Ident. Test 9.62 (p ¼ 0.002) 19.31 (p ¼ 0.000)
Endogenous Variables Endogen. Test 9.80 (p ¼ 0.001) 9.84 (p ¼ 0.001) Endogenous Variables Endogen. Test 10.27 (p ¼ 0.001) 10.53 (p ¼ 0.001)
Year Dummies Yes Yes Year Dummies Yes Yes
*, **, and *** denote significance at 10%, 5%, and 1% significance, *, **, and *** denote significance at 10%, 5%, and 1% significance,
respectively. respectively.

a t-stat of 2.28). Table 6 presents the results of 2SLS-IV re- coefficient of Age Diversity as presented in column 1 is 0.494
gressions with the external instrument CapitaCourse. Once (with a t-stat of 2.33). The coefficient of LnSDAge is 2.770
again, the coefficient of Age Diversity is 0.106 (with a t-stat (with a t-stat of 2.66). Next, Table 8 presents the results of
of 2.28), whereas the coefficient of LnSDAge is 0.501 (with a 2SLS-IV regressions with the external instrument Cap-
t-stat of 2.69). These figures are statistically significant at 5% itaCourse. The coefficient of Age Diversity is 0.231 (with a t-
level.11 Based on these findings, Hypothesis 1 can be rejec- stat of 1.79), and the coefficient of LnSDAge is 1.070 (with a t-
ted. In other words, board age diversity appears to have a stat of 1.96). Based on these findings, Hypothesis 2 cannot be
positive effect on company financial performance. These rejected. In other words, board age diversity appears to have a
findings are supportive of the findings of previous studies, positive effect on company risk.
such as Kim and Lim (2010), Mahadeo et al. (2012), and The current study also investigates whether there is a
Nguyen et al. (2015). relationship between work value diversity proxies and com-
The current study also investigates whether there is a pany performance. The results of the 2SLS-IV regressions
relationship between board age diversity and company risk. with the main variable of interest Work are presented in Table
The results of the 2SLS-IV regressions with the external in- 9. Column 1 presents the results of the regression which
strument CapitaMosque are presented in Table 7. The include CapitaMosque as the external instrument. The coef-
ficient of Work is 3.436 (with a t-stat of 1.83). When
CapitaCourse is employed as the external instrument, the
11
The coefficient of CapitaMosque in the first stage of the 2SLS-IV coefficient of Work is 2.952 (with a t-stat of 2.39) as
regression has a t-stat of 2.84 when LnSDAge is employed in the regression. presented in Column 2 of Table 9. These figures suggest that
The coefficient of the same external instrument in the first stage of the 2SLS-
IV regression is 3.49 when Age Diversity is employed in the regression. The
as the work value diversity related to the value Work increases,
signs and the significance of the coefficients of CapitaCourse are similar. company performance decreases.

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Table 7 Table 8
Effects of Age Diversity on Company Risk e 2SLS-IV: CapitaMosque. Effects of Age Diversity on Company Risk e 2SLS-IV: CapitaCourse. The
The table presents the results of 2SLS-IV regressions, where the dependent table presents the results of 2SLS-IV regressions, where the dependent vari-
variables are Leverage. The IV is CapitaMosque. Board Age Diversity is the ables are Leverage. The IV is CapitaCourse. Board Age Diversity is the
standard deviation of age of the company board members divided by the mean standard deviation of age of the company board members divided by the mean
age of the company board members. LnSDAge is the natural logarithm of the age of the company board members. LnSDAge is the natural logarithm of the
standard deviation of age of the company board members. Independent Di- standard deviation of age of the company board members. Independent Di-
rector % is the ratio of independent directors to the total number of directors rector % is the ratio of independent directors to the total number of directors
on a board. Size is the total number of directors on a board. Female Director % on a board. Size is the total number of directors on a board. Female Director %
is the ratio of female directors to the total number of directors in a board. BIG4 is the ratio of female directors to the total number of directors in a board. BIG4
is a dummy variable that takes the value of 1 if a company is audited by one of is a dummy variable that takes the value of 1 if a company is audited by one of
the big four independent audit companies. Assets is the natural logarithm of the big four independent audit companies. Assets is the natural logarithm of
the total assets. Ln (Company Age) is the natural logarithm of company age. the total assets. Ln (Company Age) is the natural logarithm of company age.
Istanbul is a dummy variable that takes the value of 1 if the company's Istanbul is a dummy variable that takes the value of 1 if the company's
headquarters is located in the city Istanbul. Extreme observations for various headquarters is located in the city Istanbul. Extreme observations for various
variables are winsorized at 1% and 99% values. Year dummies are included in variables are winsorized at 1% and 99% values. Year dummies are included in
the specifications. The standard errors are robust. t-values (z-values) are re- the specifications. The standard errors are robust. t-values (z-values) are re-
ported in parentheses. ported in parentheses.
(1) (2) (1) (2)
IV: CapitaMosque IV: CapitaMosque IV: CapitaCourse IV: CapitaCourse
LnSDAge **0.494 (2.33) LnSDAge *0.231 (1.79)
Age Diversity ***2.770 (2.60) Age Diversity **1.070 (1.96)
Independent Director % 0.156 (1.45) 0.115 (1.25) Independent Director % 0.092 (1.20) 0.066 (1.01)
Size **-0.027 (2.53) **-0.014 (2.58) Size **-0.015 (2.28) **-0.008 (2.36)
Female Director % **-0.290 (2.43) ***-0.326 (2.71) Female Director % **-0.163 (2.01) **-0.158 (2.20)
BIG4 0.015 (0.78) 0.015 (0.83) BIG4 0.008 (0.62) 0.007 (0.57)
Ln (Assets) ***0.042 (7.18) ***0.047 (8.41) Ln (Assets) ***0.044 (9.63) ***0.046 (10.45)
Ln (Company Age) ***-0.065 (3.90) **-0.032 (2.26) Ln (Company Age) ***-0.054 (4.63) ***-0.040 (3.73)
Istanbul 0.019 (0.82) 0.016 (0.73) Istanbul 0.001 (0.05) 0.005 (0.37)
C ***-1.049 (3.01) ***-0.778 (3.61) C ***-0.638 (2.93) ***-0.471 (3.73)
N 1720 1720 N 1720 1720
F 14.07 16.78 F 27.61 31.39
Kleibergen-Paap Under- 8.06 (p ¼ 0.004) 12.65 (p ¼ 0.000) Kleibergen-Paap Under- 12.42 (p ¼ 0.000) 25.90 (p ¼ 0.000)
Ident. Test Ident. Test
Endogenous Variables 14.34 (p ¼ 0.000) 15.17 (p ¼ 0.000) Endogenous Variables 4.65 (p ¼ 0.03) 5.38 (p ¼ 0.02)
Endogen. Test Endogen. Test
Year Dummies Yes Yes Year Dummies Yes Yes
*, **, and *** denote significance at 10%, 5%, and 1% significance, *, **, and *** denote significance at 10%, 5%, and 1% significance,
respectively. respectively.

On the other hand, Table 10 presents the results of 2SLS-IV

cannot argue that board work value diversity is the underlying
regressions where the main variable of interest is Competitive.
cause of the positive association between company perfor-
Column 1, which presents the results of the regression with the
mance and board age diversity. If anything, work value di-
external instrument CapitaMosque, demonstrates that the co-
versity in terms of Work and Competitive proxies appear to
efficient of Competitive is 0.577 (with a t-stat of 1.86).
have a negative effect on company performance, rather than a
Column 2 of the same Table demonstrates that the coefficient
positive effect. Therefore, even though work-related value
of Competitive is 0.379 (with a t-stat of 2.56) when Cap-
diversity could have a negative effect on company perfor-
itaCourse is employed as the external instrument. As is the
mance individually, the overall benefits of team diversity
case with Work, these figures also suggest that as the work
appear to lead to a positive effect on company performance.
value diversity related to the value Competitive increases,
Overall, these findings provide evidence suggesting that
company performance decreases.
board age diversity has a positive effect on company perfor-
Lastly, Table 11 presents the results of pooled OLS re-
mance and risk. In addition, it does not appear that intra-group
gressions that employ the other work value diversity proxies:
conflict with regard to work-related values is the underlying
Risk, Creativity, Relaxed, Traditional, and Heavy Worker.12
cause of the positive effect.
None of these work value diversities appear to be statisti-
cally significantly associated with company performance.
5. Conclusions and discussions
Combined with the results presented in Tables 9 and 10, one
The current study investigates the potential effects of board
12
age diversity on company financial performance and risk, as
Pooled OLS models are employed as opposed to 2SLS-IV since Cap-
itaMosque and CapitaCourse fail as “powerful” instruments when these 5
well as whether or not diverse values held by directors of
work value diversity proxies are included in the models. different ages are the underlying causes of any effects on

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Table 9 Table 10
Effects of Work Value Diversity on Company Performance e 2SLS-IV. Effects of Competitive Value Diversity on Company Performance e 2SLS-
The table presents the results of 2SLS-IV regressions, where the dependent IV. The table presents the results of 2SLS-IV regressions, where the dependent
variables are ROA. The IV is CapitaMosque in Column 1. The IV is Cap- variables are ROA. The IV is CapitaMosque in Column 1. The IV is Cap-
itaCourse in Column 2. Independent Director % is the ratio of independent itaCourse in Column 2. Independent Director % is the ratio of independent
directors to the total number of directors on a board. Size is the total number of directors to the total number of directors on a board. Size is the total number of
directors on a board. Female Director % is the ratio of female directors to the directors on a board. Female Director % is the ratio of female directors to the
total number of directors in a board. BIG4 is a dummy variable that takes the total number of directors in a board. BIG4 is a dummy variable that takes the
value of 1 if a company is audited by one of the big four independent audit value of 1 if a company is audited by one of the big four independent audit
companies. Assets is the natural logarithm of the total assets. Ln (Company companies. Assets is the natural logarithm of the total assets. Ln (Company
Age) is the natural logarithm of company age. Istanbul is a dummy variable Age) is the natural logarithm of company age. Istanbul is a dummy variable
that takes the value of 1 if the company's headquarters is located in the city that takes the value of 1 if the company's headquarters is located in the city
Istanbul. Extreme observations for various variables are winsorized at 1% and Istanbul. Extreme observations for various variables are winsorized at 1% and
99% values. Year dummies are included in the specifications. The standard 99% values. Year dummies are included in the specifications. The standard
errors are robust. t-values (z-values) are reported in parentheses. errors are robust. t-values (z-values) are reported in parentheses.
(1) (2) (1) (2)
IV: CapitaMosque IV:CapitaCourse IV: CapitaMosque IV: CapitaCourse
Work *-3.436 (1.83) **-2.952 (2.39) Competitive *-0.577 (1.86) ***-0.379 (2.56)
Lag (ROA) ***0.556 (13.45) ***0.554 (14.54) Lag (ROA) ***0.534 (11.63) ***0.541 (14.67)
DCA ***0.286 (3.76) ***0.300 (4.94) DCA ***0.320 (4.88) ***0.338 (6.97)
Independent Director % **-0.095 (2.09) **-0.086 (2.33) Independent Director % 0.037 (1.00) 0.037 (1.25)
Size *-0.008 (1.85) **-0.007 (2.33) Size 0.001 (0.13) 0.001 (0.37)
Female Director % *-0.063 (1.68) *-0.055 (1.93) Female Director % *-0.258 (1.83) **-0.170 (2.45)
BIG4 0.010 (1.63) *0.010 (1.75) BIG4 0.004 (0.73) 0.005 (1.08)
Ln (Assets) 0.001 (0.63) 0.001 (0.67) Ln (Assets) 0.001 (0.19) 0.001 (0.45)
Ln (Company Age) 0.002 (0.52) 0.003 (0.75) Ln (Company Age) **0.025 (2.33) ***0.019 (3.17)
Istanbul 0.019 (1.50) *0.016 (1.80) Istanbul 0.015 (1.33) 0.009 (1.43)
C *-0.116 (1.69) **-0.101 (1.96) C *-0.239 (1.90) **-0.163 (2.49)
N 1416 1416 N 1422 1422
F 21.13 25.21 F 15.91 26.69
Kleibergen-Paap Under- 4.71 (p ¼ 0.030) 8.84 (p ¼ 0.002) Kleibergen-Paap Under- 4.51 (p ¼ 0.033) 10.75 (p ¼ 0.001)
Ident. Test Ident. Test
Endogenous Variables 10.56 (p ¼ 0.001) 10.97 (p ¼ 0.000) Endogenous Variables 10.60 (p ¼ 0.001) 10.96 (p ¼ 0.000)
Endogen. Test Endogen. Test
Year Dummies Yes Yes Year Dummies Yes Yes
*, **, and *** denote significance at 10%, 5%, and 1% significance, *, **, and *** denote significance at 10%, 5%, and 1% significance,
respectively. respectively.

company performance. It utilizes a unique hand-collected effect on company financial performance. Similarly, a negative
dataset for a sample of companies quoted at the Borsa Istan- relationship between age diversity and company financial
bul between the years 2009 and 2017. performance is also suggested by the evidence in Ali et al.
The findings suggest that board age diversity has a positive (2014) for a sample of Australian companies, even though
effect on company performance. It appears that the potential Australia is characterized as a highly individualistic country
benefits of age diversity in boardrooms (such as different according to Hofstede's cultural dimensions. Similar to the
points of views and diverse knowledge and experiences among findings presented in the current study, Kim and Lim (2010)
directors that could lead to more effective monitoring, stra- find a positive relationship between age diversity and com-
tegic group decision-making, and improved creativity in pany value for a sample of South Korean companies, and
boardrooms) outweigh the potential costs of board age di- South Korea is characterized as a collectivistic country ac-
versity (such as conflicts, communication problems, flawed cording to Hofstede's cultural dimensions. Based on the find-
cooperation, and biases against out-of-group board members). ings of the current study and these three previous studies, one
These findings are somewhat surprising due to Turkey's might argue that whether a country is collectivistic or indi-
collectivistic culture, in which individuals may not value di- vidualistic may not be the underlying reason for the empirical
versity as highly as those in more individualistic cultures relationship between board age diversity and company finan-
(Jonsen et al., 2011). In such a cultural setting, increased age cial performance. However, it should not be forgotten that all
diversity in boardrooms could easily lead to potential dis- these studies have different research methodologies. Future
agreements between younger and older directors from studies that investigate the issue with multi-country samples
different generations, and these conflicts could result in are key to understanding the dynamics of the relationship
decreased company performance. For instance, China has a between board age diversity and company performance.
collectivistic culture, as does Turkey, and Talavera at al. An important point is that Turkey has a paternalistic
(2018) show that board age diversity in China has a negative management culture that determines the relationship between
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Table 11
Effects of Director Values on Company Performance. The table presents the results of pooled OLS regressions, where the dependent variable is ROA. In-
dependent Director % is the ratio of independent directors to the total number of directors on a board. Size is the total number of directors on a board. Female
Director % is the ratio of female directors to the total number of directors in a board. BIG4 is a dummy variable, which takes the value of 1 if a company is audited
by one of the big four independent audit companies. Assets is the natural logarithm of the total assets. Ln (Company Age) is the natural logarithm of company age.
Istanbul is a dummy variable that takes the value of 1 if the company's headquarters is located in the city Istanbul. Each value diversity variable is the standard
deviation of a value of the company board members divided by the mean of the value of the company board members. Extreme observations for various variables
are winsorized at 1% and 99% values. Year dummies are included in the specifications. The standard errors are robust. t-values (z-values) are reported in
parentheses.
(1) (2) (3) (4) (5)
Risk 0.005 (0.55)
Creativity 0.001 (0.31)
Relaxed 0.024 (0.42)
Traditional 0.119 (0.60)
Heavy Worker 0.001 (0.75)
Lag (ROA) ***0.570 (19.35) ***0.578 (19.51) ***0.579 (19.79) ***0.576 (19.64) ***0.578 (19.78)
Independent Director % *-0.035 (1.74) 0.030 (1.49) 0.024 (0.42) *-0.035 (1.74) *-0.038 (1.90)
Size 0.001 (0.20) 0.001 (0.07) *-0.037 (1.83) 0.001 (0.12) 0.001 (0.08)
Female Director % 0.005 (0.48) 0.001 (0.12) 0.001 (0.33) 0.004 (0.40) 0.003 (0.27)
BIG4 0.005 (1.44) 0.004 (1.14) 0.006 (0.42) 0.004 (1.28) 0.004 (1.16)
Ln (Assets) 0.001 (1.04) 0.001 (1.15) 0.004 (1.13) 0.001 (1.09) 0.001 (1.29)
Ln (Company Age) *0.005 (1.86) *0.004 (1.73) 0.001 (1.29) *0.005 (1.75) *0.004 (1.68)
Istanbul 0.003 (0.88) 0.002 (0.82) 0.004 (1.61) 0.002 (0.61) 0.003 (0.93)
C 0.029 (1.35) 0.024 (1.12) 0.001 (0.54) 0.028 (1.30) 0.024 (1.13)
N 1770 1763 1767 1768 1756
R2 0.34 0.35 0.35 0.35 0.36
F 33.93 33.66 34.33 34.47 35.42
*, **, and *** denote significance at 10%, 5%, and 1% significance, respectively.

superiors and subordinates. This paternalistic culture could year observations, for which data are available, 6317
also be expected to have consequences in terms of the rela- director-year observations earned at least a college degree at a
tionship between equal members of a group that only differ in foreign institution outside of Turkey. 1422 of these director-
age. In such a setting, it is possible that older members of the year observations have a PhD degree, whereas 4753
group typically make the decisions. In return, younger mem- director-year observations have a Master degree. 5740 are
bers would be expected to obey, show commitment, and not considered financial experts, and 1549 director-year observa-
challenge (Yamak, Ergur, Ozbilgin, & Alakavuklar, 2016). In tions are considered accounting experts.13 Therefore, in line
this case, any potential benefits of group diversity could be with the predictions of agency theory, resource dependency
lost. This paternalistic management culture, combined with theory, and human capital theory, it appears that an age diverse
the fact that a substantial percentage of companies quoted at board seems to have positive performance outcomes.
the Borsa Istanbul are family-owned (Arioglu, 2020a), could The current study also investigates whether board age diversity
lead one to question whether younger directors could effec- is associated with company risk proxied by leverage. The findings
tively challenge older directors (mostly the chairman), who are suggest that board age diversity has a positive effect on company
the heads of families in a patriarchal country. If the younger risk. In other words, as the age diversity in boardrooms increase,
directors cannot question or oppose older family members, companies make riskier decisions in terms of their capital struc-
then observing any potential positive effects of board age di- ture choices. As discussed in greater detail in the theory section
versity on company performance would be unlikely. After all, earlier, risk-taking would be expected to decrease with an in-
for board age diversity to have a positive effect on corporate dividual's age. Therefore, a board with relatively older directors
issues, such as financial performance, the opinions of younger would be expected to make less risky decisions as a team. How-
directors need to be valued by older directors on the board. ever, the empirical evidence in the current study appears to sug-
However, once again surprisingly, the paternalistic culture of gest that the presence of younger directors on boards (increased
Turkey and the dominant ownership structure of public com- board age diversity) increases the risk appetite of company boards
panies in Turkey do not appear to have the expected negative as a whole compared to boards that consist of only relatively older
effect on company performance via board age diversity. directors.
The empirical evidence appears to suggest that the opinions The findings also suggest that value-related diversity in
of directors from different generations are valued by the other boardrooms does not appear to be the underlying cause of the
members of boards of directors, and directors are “judged” positive effects of board age diversity on company perfor-
based on their opinions rather than their ages. After all, these mance, except in the case of “work” value diversity and
board members are mostly qualified individuals with “valu-
able” backgrounds. For instance, out of the 14,437 director-
13
For further details of expertise definitions, please refer to Arioglu (2015).

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“competitive” value diversity. These 2 work value diversity conduct surveys with the actual members of boards of public
proxies appear to lead to significant decreases in company companies in Turkey. However, this could be very challenging
performance, rather than increases. Thus, it seems that more (if not impossible), since they might not succeed in gathering
diversity among board members in terms of the values Work data from a sufficient number of respondents. The sample in
and Competitive have a negative impact on company perfor- this study includes over 3500 unique directors. In order to
mance. Yet such negative effects do not appear to undermine create proxies that reflect company-wide value diversity, a
the overall benefits of team age diversity in terms of company researcher would need to conduct surveys with most of these
performance. Thus, the empirical evidence presented in the directors. Secondly, since some values are considered very
current study suggests that diversity in terms of work-related sensitive subjects that are private affairs, as discussed in
values among group members from different generations is Tracey, Phillips, and Lounsbury (2014), board members might
not an obstacle for these groups to function effectively, leading not be willing to participate in these interviews, even if one
to improved company performance. assumes that board members do not have any time constraints
The contributions of this study are important considering to participate. Thirdly, respondents of such one-on-one in-
that the number of studies investigating the effects of age di- terviews might be biased towards providing socially desirable
versity on company performance for emerging markets is very responses (Parboteeah, Hoegl, & Cullen, 2008), leading to
limited. In addition, there is only one study by Talavera et al. essential biases in findings of such a research design. In other
(2018) (where researchers use a sample of Chinese banks) that words, it is not unlikely that respondents parrot responses that
investigates how board age diversity affects company risk as they think those who created surveys want to observe, rather
well as the value channels through which age diversity affects than responses that fully reflect their true beliefs. Lastly, it is
company performance. However, it is possible that any effects also possible that some of the survey questions can be
of board age diversity on company performance, and the value misunderstood by respondents, especially in the case that the
channels through which these effects might be effective might questions focus on values that can be considered “abstract”
not be similar in countries that are very different from each concepts (Graham, Harvey, & Puri, 2013).
other (as is the case for Turkey and China) when compared in The fact that the current study is of a single country is
terms of Hofstede's cultural dimensions. Such differences also another limitation. In the future, researchers could conduct a
exist between Turkey and more developed countries, such as similar study with a broader multi-country sample, and
the US and the UK. Thus, the Turkish case could be consid- investigate the impact of cultural differences on value di-
ered an interesting out-of-sample case and could add to the versity and its effects on company performance. This is
understanding of how in-group age and value diversity could consistent with Karolyi's (2016) call for more research on the
affect the consequences of decisions made by groups at the top importance of culture in financial decision-making. However,
of organizations. any researcher intending to conduct such cross-country
Lastly, a topic that has attracted more and more attention in research needs to be extra cautious. The findings of a
the last years in economics and finance literature is the effects cross-country approach might be confounded by differences
of religiosity on various corporate outcomes, and how these in various country-level factors that would have influence on
outcomes differ among countries where the dominant religions economic outcomes related to values (Chen, Huang, Lobo, &
are different, since religions and their teachings might have Wang, 2016). In addition, such an attempt is likely to suffer
varying effects on individuals’ behaviors in the workplace and from sample heterogeneity. This is due to the fact that it is
work-related values, and consequently, on various corporate not an easy task to disentangle the individual effects of
outcomes. Supported by empirical evidence in various studies, additional factors, such as economic structure, legal envi-
conclusions and implications based on the association between ronment and institutional factors, on economic outcomes in a
religion-influenced values and corporate outcomes in a setting cross-country context (Becker & Woessmann, 2009; Jiang,
might not fit well in another setting where the dominant reli- Jiang, Kim, & Zhang, 2015). Therefore, cross-country
gious belief is not the same (Du, Du, Zeng, Pei, & Chang, research increases the risk of omitted variables. Accord-
2016). Especially, Islamic work-related values are a subject ingly, such research suffers from not having enough degrees
that has been mostly ignored in the work-related values liter- of freedom in the sample to conduct powerful tests (Hilary &
ature (Kalemci & Tuzun, 2019). Therefore, the current study Hui, 2009).
aims to help fill this gap in the literature by investigating how
work-related value diversity among board members affects Conflict of interest
company performance in a setting where the majority of the
population is Muslims and, accordingly might have different There is no conflict of interest with any parties.
work-related values.
A potential limitation of the current study is that it utilizes References
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