Gender, Ethnic and Age Diversity of the Boards of Large Malaysian Firms and Performance
Kepelbagaian Jantina, Kumpulan Etnik, dan Umur dalam Lembaga Pengarah Firma Besar di Malaysia dan Prestasi

Kulliyyah of Economics and Management Sciences
International Islamic University Malaysia
P.O Box 10, 53100 Kuala Lumpur

shamsulnahar@iium.edu.my

School of Business Management
College of Business, Universiti Utara Malaysia
06010 Sintok, Kedah, Malaysia

norizah@uum.edu.my

Abstract

Board diversity is important especially in countries which practice a one-tier board system, such as Malaysia. Under the system, board appointments are usually controlled by the firm鈥檚 substantial shareholders, and as a result, directors are chosen based on 鈥渢he old-boy鈥 network or 鈥減eople like us鈥, who are typically middle-aged males and from similar ethnicity which could lead to 鈥済roup think鈥. Board diversity ensures breadth and depth of the board鈥檚 judgments. To this end, this study examines board diversity of the top 100 non-financial Malaysian firms, specifically directors鈥 gender, ethnicity and age and their effects on firm performance. Data are collected from the 2007 annual reports of the sample firms. The evidence indicates the lack of diversity of the Malaysian boards of directors. Results from the multivariate analyses reveal that gender diversity is negatively associated with Tobin鈥檚 q and ROA. Age diversity is found to be negatively related to ROA. Ethnic diversity, on the other hand, is found to be positively associated with ROA. Hence, findings on the effect of board diversity and firm performance are mixed. Nevertheless, this study offers insights to policy makers in enhancing corporate governance in Malaysia where diversity is one of the areas that could strengthen the effectiveness of the board.

Keywords

age diversity; Board diversity; ethnicity; firm performance; women directors

Citation

Abdullah, S. N., & Ku Ismail, K. N. I. (2013). Gender, Ethnic and Age Diversity of the Boards of Large Malaysian Firms and Performance. Jurnal Pengurusan, 38, 27–40.

@article{abdullah2013gender,
  title={Gender, Ethnic and Age Diversity of the Boards of Large Malaysian Firms and Performance},
  author={Abdullah, Shamsul Nahar and Ku Ismail, Ku Nor Izah},
  journal={Jurnal Pengurusan},
 

volume={38},
  number={},
  pages={27—40},
  year={2013},
  doi={},
  publisher={Penerbit 每日大赛app},
}

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38 (2013) 27 – 40

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