Board diversity and corporate performance cases in Islamic Capital Market in Indonesia / Sutrisno and Maslinawati Mohamad

• Main Authors: Dr. Drs. M.M., Sutrisno, Mohamad, Maslinawati
• Format: Book Section
• Language: English
• Published: Faculty of Accountancy 2016
• Subjects: Board of directors; Organizational behavior. Corporate culture; Organizational effectiveness. Performance measurement
• Online Access: http://ir.uitm.edu.my/id/eprint/44258/1/44258.pdf; http://ir.uitm.edu.my/id/eprint/44258/

This study aims at examining the effect of board diversity on corporate performance among Indonesian companies that registered in the Islamic capital market. Board diversity consists of the existence of women, foreigners and different ethnicity on board, number of members on board of commissioners, and board of directors. Corporate performance was measured by return on assets (ROA). The sample of this research comprises 50 firms from Indonesian Stock Exchange during 2015 - 2017 that register under the Islamic capital market. This research used multiple regression analysis to test the hypotheses. We find that women on board and the foreign on board had a significant and positive influence on corporate performance. Similarly, the board of commissioners and the board of directors both have significant and positive influence on corporate performance, whereas the existence of different ethnic on board does not affect corporate performance. This research focuses on Islamic capital market in Indonesia. Therefore, the conclusions of this research apply on the companies in Indonesia that registered under Islamic capital market. This research provides evidence on the positive effect of the board diversity on firms performance in Indonesia.