Gender diversity in board: Its impact on financial performance / Mohd Fairuz Adnan, Nurshamimi Sabli and Azizah Abdullah

• Main Authors: Adnan, Mohd Fairuz, Sabli, Nurshamimi, Abdullah, Azizah
• Format: Conference or Workshop Item
• Language: English
• Published: 2013
• Subjects: Income. Factor shares; Social psychology; Theory. Method. Relations to other subjects
• Online Access: http://ir.uitm.edu.my/id/eprint/40814/1/40814.PDF; http://ir.uitm.edu.my/id/eprint/40814/

The purpose of this study is to investigate the association between board diversity and firm performance of 26 government-linked companies (GLCs) and 26 non-government linked companies (non-GLCs) in Malaysia. The study focused on gender variable to explain the board diversity and tested its relationship towards firm financial performance as measured by return on equity (ROE) and return on asset (ROA). Due to limited previous research conducted on diversity in Malaysian firms. this article attempts to fill the gap. It is hypothesised that in general, diversity in board has a positive effect on the firm performance. In order to investigate the findings. a final sample of 203 GLCs and non-GLCs listed on the Bursa Malaysia are used across four years from 2007 to 2010. It is analyzed using a quantitative method that is employed by SPSS which compared characteristics of boards with firm performance. The finding reveals that board diversity as measured by gender differences was negatively and significantly related to ROA and ROE in both GLCs and non-GLCs. The results failed to satisfy the expectation made under this study. thus rejecting the hypothesis that gender board diversity is positively related to firm performance. As a conclusion. this study could not establish that diversity in board would enhance firm performances. Hence. a future need to address a balance between men and women would be of greater importance rather than the presence of woman in the board in ensuring better firm performance.