Who Sits at the Table? : Board Age Diversity and Financial Performance in Swedish SMEs

Sammanfattning

This thesis examines how board age diversity relates to financial performance in Swedish small and medium-sized enterprises (SMEs). It addresses the research question of how different dimensions of board age diversity relate to accounting-based profitability in nonlisted Swedish SMEs. Drawing on agency theory, resource dependence theory, and upper echelons theory, the study conceptualizes age diversity as separation (differences in age in years), variety (distribution across generational cohorts), and disparity (concentration of age-related power and status), in line with Harrison and Klein’s (2007) typology. Using an archival research design and a positivist, deductive approach, the analysis is based on secondary data for 23 863 Swedish SMEs, covering 93 216 firm-year observations between 2021 and 2024. Firm performance is measured through accounting-based profitability indicators, with return on assets (ROA) as the main dependent variable and return on equity (ROE) used in additional robustness tests. Board age diversity measures are constructed in STATA from directors’ birth years, and the relationships are estimated using panel regressions with firm-level financial and board characteristics, as well as industry and year dummies, as controls.The results show that age separation and age disparity are positively and statistically significantly associated with both ROA and ROE, and these relationships remain robust in firm fixed-effects models. In contrast, age variety shows negative and significant associations with profitability, only in pooled OLS. However, these effects disappear in firm fixed-effects specifications. Additional tests find no evidence for non-linear relationshipsfor any of the age diversity measures. Overall, the findings suggest that board age diversity in Swedish SMEs relates to profitability, where broader age dispersion span is linked to higher accounting returns, while categorical age variety is not consistently beneficial. The thesis contributes by applying a multidimensional age diversity framework in a large SME sample and highlights that diversity policies should consider how age heterogeneity is structured rather than assuming uniformly positive effects.