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Abstract
Purpose - This study aims to investigate the impact of board diversity and woman's CEO on firm profitability in Malaysia context.
Design/methodology/approach - OLS regression analysis is employed to investigate the association between diverse on board's gender, national, ethnic and CEOs are women and firm profitability of Malaysian public listed companies for the year 2016.
Findings - The author concludes that board with national culture is significantly and positively related to firm profitability; ethnicity board and woman is CEO of company does not related to firm profitability. Gender diversity reveals negative insignificant result on firm profitability.
Practical implications - The finding implies gender diversity, ethnicity differences and woman as CEO are not equally important and not affects the effectiveness of board of directors.
Originality/value - The author make first attempt to examine the total operating income to net sales to investigate the association of diverse on boards, woman's CEO and firm profitability.
Keywords: Board diversity, Gender, Woman, Nationality, Ethnicity
Introduction
In recent years, female representative on the board of director becomes favorable in boardrooms and has gained considerable interest in academic debate, corporate strategy and even in government agenda. Empirical research found that board diversity on a boardroom enables the organisation to think strategically in corporate planning. While board diversity helps organisation strategize corporate threats and opportunities through the eyes of variety stakeholders and improve organisational processes and firm performance. Having said that, monitoring function was enhanced and enable to eradicate irregularities in financial reporting as diverse on board more comfortable and confidence to query the management (Rhode and Packel, 2014). With a diverse on boards also resulting to creativity, innovation and a better knowledge in enhancing firm performance. In addition, the board diversity also can improve board discussion, problem solving and ability to make a better decision making (Ferreira, 2010). Greater board diversity also can make board structure more knowledgeable and sensitive to a wider variety of groups, improve reputation and performance more adaptable to its ever changing environment.
Focusing on the new practices were enhanced including to strengthen board composition, independence, accountability and transparency motivated this study to gauge the board structural effectiveness through board diversity on boardroom, with aims to provide a new insight on corporate strategy to company's stakeholders....