The Influence of Ethical Leadership and Board Gender Diversity on Fraud Prevention in Malaysia Corporations: the Mediating Effect of Corporate Culture

Lim, Xin Ru (2024) The Influence of Ethical Leadership and Board Gender Diversity on Fraud Prevention in Malaysia Corporations: the Mediating Effect of Corporate Culture. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

Text 47. Lim Xin Ru (MCG).pdf Restricted to Registered users only Download (2MB)

Abstract

Fraud is a significant financial crime in organisations, driven by individuals seeking personal or organisational gain. Historical corporate scandals like Enron and WorldCom have resulted in massive market capitalisation losses, highlighting the prevalence and impact of fraudulent activities. Such fraudulent activities not only jeopardise the reliability of financial reports but also erode investor confidence and market integrity. It also erodes public trust in government-linked corporations and leads to political repercussions. Hence, recognising those adverse effects, prevention is the most effective strategy to avoid corporate fraud. Failure to implement those preventive measures against fraud enables the downfall of the organisations. This research aims to explore the influence of ethical leadership, board gender diversity and corporate culture on fraud prevention, recognising the urgent need for robust measures to curb fraud and corruption within the Malaysian corporate landscape. To answer research questions and objectives, a quantitative and cross-sectional study method has been employed in this research paper by collecting primary data via an online questionnaire involving 370 full-time employees in Malaysia. Data collected are analysed using Statistical Package for Social Sciences (SPSS) Version 29.0 and Partial Least Square – Structural Equation Modelling 4.0 (PLS-SEM 4.0 also known as SmartPLS 4.0). Research findings reveal that ethical leadership, board gender diversity and corporate culture are positively related to fraud prevention. Ethical leadership has a positive relationship with corporate culture but is not significant, unlike board gender diversity has a positive significant relationship with corporate culture. For mediating hypotheses, corporate culture does not mediate the relationship between ethical leadership and board gender diversity while it mediates the relationship between ethical leadership and board gender diversity. From a practical perspective, the questionnaire of this study could be extracted as a guideline to evaluate the performance of leaders, as well as special attention is drawn to promoting ethical leaders and carrying out training and mentorship programs for younger and newer employees within the organisations. Also, the limitations of this study have been identified and recommendations are specified for further improvement in future research