Board Diversity in Private Vs. Public Firms

Wednesday March 13, 2024


We test whether differences in ownership structure influence race and gender diversity in corporate boards. We find that privately-owned, venture-backed companies appoint a lower proportion of minorities and women to their boards compared to publicly traded firms. After the George Floyd Social Justice Movements of 2020, the racial diversity gap in appointments widened significantly from 7 to 30 percentage points, as private firms responded less to social and media pressure to diversify. The lack of diversity in venture-capital (VC) backed private firms is persistent and remains following firms’ IPO, leading to a diversity gap between VC- and non-VC-backed public firms. We show real effects of board diversity, as companies with Black directors are more likely to hire Black employees, an effect absent for Hispanic and female directors. Our study, which uses image recognition techniques combined with extensive manual review to build the first large database of board diversity in VC-backed private firms, highlights the influence of both venture capitalists and public shareholders on board composition and its implications on employee composition.


Johan Cassel, Vanderbilt University
James Weston, Rice University
Emmanuel Yimfor, Columbia Business School