ISSN: 2225-8329
Open access
The objective of this study, which is based on the upper echelon theory, managerial networking theory and agency theory, is to investigate the influence of board diversity on the performance of Malaysian Pharmaceutical Listed Companies. The information was gathered from pharmaceutical businesses listed on the Bursa Malaysia Berhad from 2015 to 2020. Because the data comprises observations on distinct company parts throughout time, the fixed effects model is used to address the endogeneity problem. We discovered that gender diversity, board size, and foreign directors as evaluated by Bhattacharya's index have a favorable and significant effect on Pharmaceutical-listed firm performance for both accounting and market measures after controlling for many firms and board characteristics. In Pharmaceutical-listed firms, independence, diversity, meeting, and expertise do not appear to be important determinants of corporate performance. The findings confirmed the efficient monitoring hypothesis and management networking theory, which propose that director variety minimizes managerial entrenchment on the one hand, while networking boosts firm resources on the other.
Acquaah, M. (2006). “The Impact of Managerial Networking Relationships on Organizational Performance in SubSaharan Africa: Evidence from Ghana.” Organization Management Journal, 3 (2), 115-138.
Aggarwal, R., Jindal, V., & Seth, R. (2019). Board Diversity and Firm Performance: The role of Business Group Affiliation. International Business Review, 28, 101600.
Agustin, H., Abdul Rahman, F., & Jamil, P. C. (2020). “A Critical Islamic Perspective Towards Agency Theory.” International Journal of Economics, Business and Management Research, 4 (8), 43-50.
Alves, S. (2012), “Ownership Structure and Earnings Management: Evidence from Portugal.” Australasian Accounting, Business and Finance Journal, 6(1), 57-74.
Bhatt, R. R., & Bhattacharya, S. (2017). Family firms, board structure and firm performance: evidence from top Indian firms. International Journal of Law and Management.
Daniel, C. M., Roberts, H., & Whiting, R. H. (2015). Board Gender Diversity and Firm Performance: Empirical Evidence from Hong Kong, South Korea, Malaysia, and Singapore. Pacific-Basin Finance Journal, 35, 381-401.
?er?a, D. (2017), "International Experience in Upper Echelon Theory: Literature Review" Business Systems Research Journal, vol.8, no.2, pp.126-142.
Detthamrong, U., Chancharat, N., & Vithessonthi, C. (2017). Corporate Governance, Capital Structure and Firm Performance: Evidence from Thailand. Research in International Business and Finance, 42, 689-709.
Garcia-Sanchez, I. M., Martínez-Ferrero, J., & García-Meca, E. (2017). Gender diversity, financial expertise and its effects on accounting quality. Management Decision.
Gonza´lez, J. S., & Garc?´a-Meca, E. (2014). “Does Corporate Governance Influence Earnings Management in Latin American Markets?” Journal of Business Ethics, 121, 419–440
Hambrick, D. C., & Mason, P. A. (1984), "Upper echelons: The organization as a reflection of its top managers", Academy of Management Review, 9, 2, pp 193-206.
Hu, S., & Zhang, Y. (2021). COVID-19 Pandemic and Firm Performance: Cross-country Evidence. International Review of Economics and Finance, 74, 365-372.
Hu, Y., & Izumida, S. (2008), “The Relationship between Ownership and Performance: A Review of Theory and Evidence.” International Business Research, 1(4), pp 72-81.
Jensen, M. C., & Meckling, W. H. (1976). “Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure.” Journal of Financial Economics, 3(4), 305-360.
Kazemian, S., & Sanusi, M. Z. (2015), “Earnings Management and Ownership Structure.” Procedia Economics and Finance, 31, 618 – 624.
Ko, C., Lee, P., & Anandarajan, A. (2019). The impact of operational risk incidents and moderating influence of corporate governance on credit risk and firm performance. International Journal of Accounting & Information Management.
Konak, S. (2018). “Managerial Social Networks Effect on Firm Performance: A Research in Five Star Hotels.” International Journal of Business and Applied Social Science. 4 (4), 40-47.
Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of accounting and economics, 39(1), 163-197.
Kyne, D. (2005). “Managerial Networking of Public and Private Sector: A study of Thai Executives.” Public Administration and Management, 10(4), 278–324.
Low, D. C. M., Roberts, H., & Whiting, R. H. (2015), “Board Gender Diversity and Firm Performance: Empirical Evidence from Hong Kong, South Korea, Malaysia and Singapore”, Pacific-Basin Finance Journal, 35, pp 381-401.
Makhlouf, M. H., Laili, N. H., Ramli, N. A., & Basah, M. Y. (2017). Board of directors’ effectiveness and firm performance: Evidence from Jordan. Research Journal of Finance and Accounting, 8(18), 23-34.
Masulis, R. W., Wang, C., & Xie, F. (2012). Globalizing the boardroom—The effects of foreign directors on corporate governance and firm performance. Journal of Accounting and Economics, 53(3), 527-554.
Mwendwa, A. M., Atambo, W., Iravo, M., & Atikiya, R. (2020). “Influence of Managerial Networking on Competitive Advantage in Medium and Large Garment Companies in Kenya.” International Journal of Science and Research, 9 (5), 138-147.
Naciti, V. (2019). Corporate Governance and Board of Directors: The effect of a Board Composition on Firm Sustainability Performance. Journal of Cleaner Production, 237, 117727.
Naqshbandi, M. M., & Kaur, S. (2014). “Do Managerial Ties Support or Stifle Open Innovation?” Industrial Management & Data Systems, 114 (4).
Nguyen, T., Locke, S., & Reddy, K. (2015), “Does Boardroom Gender Diversity Matter? Evidence from a Transitional Economy”, International Review of Economics and Finance, 37, pp 184-202.
Ozdemir. (2020). Board diversity and Firm Performance in the US Tourism Sector: The effect of Institutional Ownership. International Journal of Hospitality Management, 91, 102693.
Ramon-Jeronimo, J. M., Florez-Lopez, R., Araujo-Pinzon, P. (2019), “Resource-Based View and SMEs Performance Exporting through Foreign Intermediaries: The Mediating Effect of Management Controls”, Sustainability, 11(12):3241.
Song, H. J., Yoon, Y. N., & Kang, K. H. (2020), “The relationship Between Board Diversity and Firm Performance in the Lodging Industry: The moderating role of Internalization”, International Journal of Hospitality Management, 86, pp. 102461.
Suffian, M. T. M., & Sanusi, Z. M. (2015). Real earnings management and firm value: Empirical evidence from Malaysia. Management & Accounting Review (MAR), 14(1), 25-47.
Ting, I. W. K., Azizan, N. A., & Kweh, Q. L. (2015), “Upper Echelon Theory Revisited: The Relationship between CEO Personal Characteristics and Financial Leverage Decision”, Procedia – Social and Behavioural Sciences, 195, pp 686-694.
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy (Vol. 55). Boston: pearson.
Zabri, S. M., Ahmad, K., & Wah, K. K. (2016). Corporate Governance Practices and Firm Performance: Evidence from Top 100 Public Listed Companies in Malaysia, Procedia Economics and Finance, 35, 287 – 296.
Zee, A. V. D., & Swagerman, D. (2009), “Upper Echelon Theory and Ethical Behaviour: An Illustration of the Theory and a Plea for its Extension Towards Ethical Behaviour”, Journal of Law and Governance, 4(2), pp 27-43.
In-Text Citation: (Shamsudin et al., 2022)
To Cite this Article: Shamsudin, S. M., Suffian, M. T. M., & Ab. Rahman, L. (2022). The Effect of Board Diversity and Corporate Performance in Malaysia: Pre- and During COVID-19 Pandemic. International Journal of Academic Research in Accounting Finance and Management Sciences. 12(2), 525 – 536.
Copyright: © 2022 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode