The Impacts of Board Independence, Transparency and Ethical Leadership on Board Effectiveness among Malaysian Companies: the Mediating Role of Gender Diversity

Looi, Elaine (2024) The Impacts of Board Independence, Transparency and Ethical Leadership on Board Effectiveness among Malaysian Companies: the Mediating Role of Gender Diversity. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

Text 42. Looi Elaine (MCG).pdf Restricted to Registered users only Download (4MB)

Abstract

Several countries have introduced gender boardroom quotas by which organisations are required to appoint at least a certain number or proportion of women to their boards. This is because the lack of women representation on boards has become an important issue recently that need to be addressed due to the benefits driven from gender diversity in the boardrooms. Therefore, a key challenge for Malaysian companies today is to practice gender diversity. Subsequently, Malaysian Government has adopted reforms which aim to increase the gender diversity at corporate boards through Malaysian Code on Corporate Governance. According to Practice 4.5 of Revised Malaysian Code on Corporate Governance 2017, it required all the Large Companies to conduct at least 30% of women who sit in the boardrooms as well as to disclose their diversity policy, targets and measures to meet those targets in their annual report. In brief, it is necessary to implement the gender diversity practice in an organisation as to promote sound corporate governance and enhance corporate performance. The objective of this study is to analyse the impacts such as board independence, transparency and ethical leadership towards board effectiveness in Malaysian companies. This study also intends to identify whether the gender diversity will mediate the relationship between board independence, transparency, ethical leadership and board effectiveness within Malaysian corporations. In fact, there is a total of seven research questions and hypotheses to be developed and tested to achieve the objectives of this research. To achieve the objectives of this research, a quantitative and cross-sectional study methods had been adopted by surveying 211 employees who are currently working in the Malaysian companies. The data obtained are then analysed via Statistical Package for Social Science version 29.0 (SPSS) and Partial Least Square – Structural Equation Modelling (PLS-SEM a.k.a. SmartPLS 4.0 software). This research findings revealed that board independence, transparency and ethical leadership are significantly negatively related to board effectiveness. As for the mediating hypotheses, gender diversity partially mediates the relationship between board independence toward board effectiveness. Furthermore, it was also revealed that gender diversity does not mediate the relationship between transparency and ethical leadership toward board effectiveness. The contributions of this research to future researchers and employers were highlighted. In addition, the limitations of this research have been identified and recommendations were suggested for future improvement in future research