Corporate diversification in family firms: Does board composition matter?

Building on behavioral agency theory and the resource-based view, we explore the role played by corporate governance characteristics of family firms in affecting their diversification strategies. Specifically, we investigate the role played by two sources of board heterogeneity, namely board size and board gender diversity, on the likelihood that family firms will execute a diversifying acquisition vis-à-vis a related acquisition. Furthermore, we explore the contingency effect played by foreign directorship and the firm’s listing status. Using a sample of 213 cross-border acquisitions executed between 2008 and 2021 by Italian family firms, we find evidence that large board size and greater gender diversity positively affect diversification of family firms. While the presence of international directors magnifies the positive effect of board size, gender diversity discourages diversification in case of listed firms.