The Influence of Corporate Governance on Board Effectiveness Mediated by Gender Diversity at Different Firm Sizes

Yap, Chun Seng (2021) The Influence of Corporate Governance on Board Effectiveness Mediated by Gender Diversity at Different Firm Sizes. Masters thesis, Tunku Abdul Rahman University College.

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Abstract

A number of countries have introduced gender boardroom quotas by which firms are required to appoint at least a certain number or proportion of women to their boards. Subsequently, the government of Malaysia, in 2011, introduced the policy of having at least 30 per cent women on corporate boards by 2017. This study examines the mediation effect of gender diversity on the relationship between corporate governance and board effectiveness in Malaysia. In addition, we examine if the firm size will moderate the relationship between corporate governance and board effectiveness, also, gender diversity and board effectiveness. A questionnaire survey was conducted on a sample of 150 working employees from respective small and large firms who works in the public listed companies in Malaysia. The findings are three-fold. First, corporate governance, as measured by fairness, transparency and accountability, has a stronger effect on board effectiveness among small firms, as small firms have less bureaucracy and hierarchical in the management. Second, corporate governance has a significant positive effect on board effectiveness. Finally, gender diversity in large firms has stronger effect on board effectiveness as the Practice 4.5 of MCCG 2017 postulate that large firms must have at least 30% of women participation on board. This study is important to the policymakers to better align or revise the existing corporate governance framework, policies and guidelines. Bursa Malaysia and Companies Commission of Malaysia can also use the results of this research to evaluate current board composition practices and the importance of board gender diversity in shaping corporate performance.