Top Management Team Diversity and Firm Performance : investigating German Companies

Abstract

This research aims to investigate the relationship between Top Management Team (TMT) demographic diversity and financial firm performance of German companies by using empirical quantitative analysis methods. After having outlined major lines of thought and concepts and proposing a theoretical model, the empirical section tries to uncover a negative curvilinear relationship between three demographic diversity variables (age, firm tenure, TMT tenure) and firm performance. Therefore a sample including companies of the German DAX and MDAX is used. Using regression analysis for the complete sample and subsamples - separated by environmental conditions - the results do not as strongly as hypothesized favour a negative curvilinear relation. A detailed analysis is given thereafter. The influence of outliers as well as possible flaws in the data and the model are outlined. This work is special with regards to the hypothesized relationship as well as the sample.