Women on Boards of Malaysian Firms: Impact on Market and Accounting Performance

29 Pages Posted: 11 Sep 2012

See all articles by Shamsul Abdullah

Shamsul Abdullah

Kulliyyah of Economics and Management Sciences

Ku Nor Izah Ku Ismail

Universiti Utara Malaysia - School of Accountancy

Lilac Nachum

City University of New York - Allen G. Aaronson Department of Marketing & International Business

Date Written: September 10, 2012

Abstract

We seek to offer some reconciliation for the conflicting theoretical arguments and empirical findings regarding the impact of women’s participation in boards on firms’ performance. We suggest that this impact differs in relation to market- and accounting-performance, and it is firm-specific, and varies by firms’ ownership type and the composition of their boards. These arguments find theoretical underpinnings in agency and resource-dependency theories, combined with behavioral and discrimination theories that articulate women behavior in the workplace and market perception of gender equality. The empirical analysis is based on a dataset of 841 publicly-listed firms in Malaysia. The results show positive impact of women’s participation on accounting-performance and negative impact on market-performance, suggesting that women directors create economic value, which is undervalued by the market. We interpret the findings with reference to the perception of women’s role in society and business in Malaysia, and the nature of corporate governance and ownership types prevalent among Malaysian firms. We suggest that the relationships might be context-specific, and hence the desired level of women’s participation varies across countries. We discuss the normative implications of the findings for government authorities considering legislation of gender-quota on boards, and for firms.

Suggested Citation

Abdullah, Shamsul and Ku Ismail, Ku Nor Izah and Nachum, Lilac, Women on Boards of Malaysian Firms: Impact on Market and Accounting Performance (September 10, 2012). Available at SSRN: https://ssrn.com/abstract=2145007 or http://dx.doi.org/10.2139/ssrn.2145007

Shamsul Abdullah

Kulliyyah of Economics and Management Sciences ( email )

Persiaran Duta
Jalan Gombak
Kuala Lumpur
Malaysia
6019-4700927 (Phone)

Ku Nor Izah Ku Ismail

Universiti Utara Malaysia - School of Accountancy ( email )

Sintok, Kedah Darul Aman 06010
Malaysia

Lilac Nachum (Contact Author)

City University of New York - Allen G. Aaronson Department of Marketing & International Business ( email )

One Bernard Baruch Way, B12-240
New York, NY 10010-5585
United States

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