Gender diversity in board: Its impact on financial performance / Mohd Fairuz Adnan, Nurshamimi Sabli and Azizah Abdullah

The purpose of this study is to investigate the association between board diversity and firm performance of
26 government-linked companies (GLCs) and 26 non-government linked companies (non-GLCs) in Malaysia.
The study focused on gender variable to explain the board diversity and tested its relationship towards firm
financial performance as measured by return on equity (ROE) and return on asset (ROA). Due to limited
previous research conducted on diversity in Malaysian firms. this article attempts to fill the gap. It is
hypothesised that in general, diversity in board has a positive effect on the firm performance. In order to
investigate the findings. a final sample of 203 GLCs and non-GLCs listed on the Bursa Malaysia are used
across four years from 2007 to 2010. It is analyzed using a quantitative method that is employed by SPSS
which compared characteristics of boards with firm performance. The finding reveals that board diversity as
measured by gender differences was negatively and significantly related to ROA and ROE in both GLCs and
non-GLCs. The results failed to satisfy the expectation made under this study. thus rejecting the hypothesis
that gender board diversity is positively related to firm performance. As a conclusion. this study could not
establish that diversity in board would enhance firm performances. Hence. a future need to address a
balance between men and women would be of greater importance rather than the presence of woman in the
board in ensuring better firm performance.