Empirical Research on the Impact of Board Leadership, Frequency of Board Meetings and Gender Diversity on Corporate Governance Performance: the Mediating Role of Intellectual Capital

Jagathesan, Nevasini (2023) Empirical Research on the Impact of Board Leadership, Frequency of Board Meetings and Gender Diversity on Corporate Governance Performance: the Mediating Role of Intellectual Capital. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

The widespread corporate fraud of large corporations has drawn considerable critical attention to the necessity for efficient corporate governance mechanisms to monitor and control business operations. Determining the efficiency of corporate governance mechanisms depends significantly on the performance of the board of directors. Intellectual capital (IC) performance can be significantly influenced by corporate governance (CG) as both are interconnected and IC is recognised as one of CG mechanisms. However, since IC is a relatively new field, developing countries have not paid much attention to the study of IC and the empirical knowledge is limited. By investigating the relationship between IC and CG, this research fills the gap in corporate governance literature. This study examines the mediating effect of intellectual capital on effective board characteristics (i.e., board leadership, frequency of board meetings and gender diversity) and how these factors have an impact on corporate governance performance. This research adopts the quantitative research method with a cross-sectional design and online survey method for data collection. A total sample of 230 was collected from Malaysian employees and the data collected were analysed using the SPSS and SmartPLS software. The research findings revealed significant positive relationships between the effective board characteristics or factors (i.e. board leadership, frequency of board meetings, and intellectual capital) and corporate governance performance. However, the result also revealed that there is no significant positive relationship between gender diversity and CG performance. As for the mediating hypotheses, IC partially mediates the relationship between gender diversity and CG performance, as well as frequency of board meetings and CG performance, but IC does not mediate the relationship between board leadership and CG performance. From a practical perspective, this research raises awareness of organisations to understand the importance of implementing sound corporate governance, adopting transformational leadership style and to have diverse board members in the company. Additionally, the limitations of this research have been identified and recommendations were provided for further improvement in future research. Furthermore, this research has highlighted the importance of implementing sound corporate governance structure and effective boardroom characteristics or factors to enhance CG performance that will eventually enhance the company’s performance as well.