A Critical Review of Board Diversity and Corporate Financial Sustainability: Synthesizing Evidence from Global Markets

Abstract

This article critically reviews literature on the relationship between board diversity and corporate financial sustainability (CFS) in global markets. A systematic search of the Scopus database resulted in 119 peer-reviewed articles published between 2020 and 2025. The review develops a comprehensive conceptual framework consisting of five independent variables (board gender diversity, board cultural diversity, board independence, board skills, and board tenure), three mediators (ESG performance, carbon emissions performance, and sustainability reporting), three moderators (firm size, industry sensitivity, and national culture), and four control variables (firm leverage, profitability, ownership structure, and firm age). The synthesis shows that while board diversity generally has a positive effect on CFS through improved ESG outcomes, this relationship depends on reaching a critical mass of female directors and is significantly influenced by contextual factors. The review critically assesses the main theoretical foundations, agency, resource dependence, stakeholder, and critical mass theories, and highlights ongoing methodological limitations, especially the predominance of quantitative archival research that treats boardroom dynamics as a black box. The findings suggest that translating diversity into better financial sustainability is neither automatic nor consistent, but rather relies on a complex interaction between internal governance structures and external institutional environments. The article concludes by proposing a future research agenda that emphasizes methodological diversification, the investigation of intersecting dimensions of diversity, and an increased focus on under-researched geographical regions.