Women on Boards of Malaysian Firms: Impact on Market and Accounting Performance
29 Pages Posted: 11 Sep 2012
Date Written: September 10, 2012
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.
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