Women directors and performance: evidence from Malaysia

Abstract Purpose – The purpose of this paper is to examine the relationship between women on board and the financial performance of Malaysian listed companies. Design/methodology/approach – Panel generalised method of moments (GMM) analysis was used over 928 public-listed companies listed on the Malaysian Stock Exchange from 2010 to 2016. GMM overcomes the problem of endogeneity and simultaneity bias. The dependent variable was firm performance, measured by Tobin’s Q. The explanatory variable was gender diversity, proxied by the percentage of women on board, the presence of women and gender heterogeneity indices, Blau and Shannon indices. Findings – More gender diversification leads to declining firm performance possibly due to issues of tokenism and gender stereotypes. Research limitations/implications – Further studies should look into the impact of various types of ownership structures on firm value and also by sectors. Practical implications – As women represent half the population in Malaysia, more positive affirmative policies must be introduced to enhance their contributions to society. Social implications – As women progress in society, their contributions towards nation building will be significant. Women not only play a nurturing role, but also can shape the destiny of a country. Originality/value – Studies on the relationship between board gender diversity and financial performance have been conducted in the context of a few developed economies. This study contributes to the literature by examining such an issue in a developing economy that has a different environment from that of developed economie