IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v5y2017i3p17-d109796.html
   My bibliography  Save this article

Does Corporate Diversity Really Matter in the Plantation Sector? Empirical Evidence from a World Islamic Leading Country and Market Reaction

Author

Listed:
  • Rohail Hassan

    (Department of Management and Humanities, Universiti Teknologi PETRONAS (UTP), Malaysia, 32610 Seri Iskandar, Perak Darul Ridzuan, Malaysia)

  • Maran Marimuthu

    (Department of Management and Humanities, Universiti Teknologi PETRONAS (UTP), Malaysia, 32610 Seri Iskandar, Perak Darul Ridzuan, Malaysia)

Abstract

The paper examines demographic and cognitive diversity at top-level management and its impact on the performance of Malaysian-listed companies (Plantation and Energy Sectors). Although many organisations aspire to be socially diverse, diversity’s consequences for organisational performance remain unclear. Do profitable firms tend to enhance board diversity or other attributes of the firm that contribute towards the firm’s financial performance? This study specifies the whole distinct mechanism and measures it independently; bridging as the demographic and cognitive diversity among the board of directors (BODs) and bonding as the firm’s financial performance. To maintain the homogeneity factor, empirical analysis is confined to two fully-fledged sectors and 125 Malaysian listed firms out of 798 firms selected on the basis of judgmental sampling during the period of 2009 to 2013. The paper applies econometrics methodology on panel data analysis and the correlation matrix to justify this phenomenon. The paper attempts to fill the gap in the existing literature, discuss the empirically diverse corporate boards with the interaction approach and its impact on firm performance (a) gender diversity and foreign participation (b) gender diversity and ethnic diversity. The empirical findings suggest that both demographic and cognitive diversity are significant predictors of a firm’s financial performance. Hence, the companies specifically belonging to plantation and energy sectors are more responsible for promoting diversity among top-level management.

Suggested Citation

  • Rohail Hassan & Maran Marimuthu, 2017. "Does Corporate Diversity Really Matter in the Plantation Sector? Empirical Evidence from a World Islamic Leading Country and Market Reaction," IJFS, MDPI, vol. 5(3), pages 1-25, August.
    • Handle: RePEc:gam:jijfss:v:5:y:2017:i:3:p:17-:d:109796
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/5/3/17/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/5/3/17/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Geoffrey C. Kiel & Gavin J. Nicholson, 2003. "Board Composition and Corporate Performance: how the Australian experience informs contrasting theories of corporate governance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(3), pages 189-205, July.
    2. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    3. Mijntje Lückerath-Rovers & Auke De Bos, 2011. "Code of Conduct for Non-Executive and Supervisory Directors," Journal of Business Ethics, Springer, vol. 100(3), pages 465-481, May.
    4. Rohail Hassan & Maran Marimuthu, 2016. "Corporate Governance, Board Diversity, and Firm Value: Examining Large Companies Using Panel Data Approach," Economics Bulletin, AccessEcon, vol. 36(3), pages 1737-1750.
    5. Shamsul Abdullah, 2014. "The causes of gender diversity in Malaysian large firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1137-1159, November.
    6. Humera Khan & Rohail Hassan & Maran Marimuthu, 2017. "Diversity on Corporate Boards and Firm Performance: An Empirical Evidence from Malaysia," American Journal of Social Sciences and Humanities, Pacharapa Naka, vol. 2(1), pages 1-8.
    7. Kristina Dahlin & L. Weingart & P. Hinds, 2005. "Team diversity and information use," Post-Print hal-00480406, HAL.
    8. Dalilawati Zainal & Norhayah Zulkifli & Zakiah Saleh, 2013. "Corporate Board Diversity in Malaysia: A Longitudinal Analysis of Gender and Nationality Diversity," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(1), pages 136-148, January.
    9. Kevin Campbell & Antonio Minguez Vera, 2010. "Female board appointments and firm valuation: short and long-term effects," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 14(1), pages 37-59, February.
    10. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2015. "Does boardroom gender diversity matter? Evidence from a transitional economy," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 184-202.
    11. Fitzsimmons, Stacey R., 2012. "Women on boards of directors: Why skirts in seats aren’t enough," Business Horizons, Elsevier, vol. 55(6), pages 557-566.
    12. Khan, Walayet A. & Vieito, João Paulo, 2013. "Ceo gender and firm performance," Journal of Economics and Business, Elsevier, vol. 67(C), pages 55-66.
    13. Booth, James R. & Cornett, Marcia Millon & Tehranian, Hassan, 2002. "Boards of directors, ownership, and regulation," Journal of Banking & Finance, Elsevier, vol. 26(10), pages 1973-1996, October.
    14. Humera Khan & Rohail Hassan & Maran Marimuthu, 2017. "Diversity on Corporate Boards and Firm Performance: An Empirical Evidence from Malaysia," American Journal of Social Sciences and Humanities, Online Science Publishing, vol. 2(1), pages 1-8.
    15. Mitton, Todd, 2002. "A cross-firm analysis of the impact of corporate governance on the East Asian financial crisis," Journal of Financial Economics, Elsevier, vol. 64(2), pages 215-241, May.
    16. repec:eme:arjpps:v:28:y:2015:i:3:p:268-283 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Amin Jan & Maran Marimuthu & Rohail Hassan & Mehreen, 2019. "Sustainable Business Practices and Firm’s Financial Performance in Islamic Banking: Under the Moderating Role of Islamic Corporate Governance," Sustainability, MDPI, vol. 11(23), pages 1-25, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vincenzo Scafarto & Federica Ricci & Elisabetta Magnaghi & Salvatore Ferri, 2021. "Board structure and intellectual capital efficiency: does the family firm status matter?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 841-878, September.
    2. Nguyen, Tuan & Nguyen, An & Nguyen, Mau & Truong, Thuyen, 2021. "Is national governance quality a key moderator of the boardroom gender diversity–firm performance relationship? International evidence from a multi-hierarchical analysis," International Review of Economics & Finance, Elsevier, vol. 73(C), pages 370-390.
    3. Aruoriwo Marian Chijoke-Mgbame & Agyenim Boateng & Chijoke Oscar Mgbame, 2020. "Board gender diversity, audit committee and financial performance: evidence from Nigeria," Accounting Forum, Taylor & Francis Journals, vol. 44(3), pages 262-286, July.
    4. Tanaka, Takanori, 2019. "Gender diversity on Japanese corporate boards," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 19-31.
    5. Zeineb Ouni & Jamal Ben Mansour & Sana Arfaoui, 2020. "Board/Executive Gender Diversity and Firm Financial Performance in Canada: The Mediating Role of Environmental, Social, and Governance (ESG) Orientation," Sustainability, MDPI, vol. 12(20), pages 1-17, October.
    6. Ahmed Bouteska & Mehdi Mili, 2022. "Women’s leadership impact on risks and financial performance in banking: evidence from the Southeast Asian Countries," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(4), pages 1213-1244, December.
    7. Sanjukta Brahma & Chioma Nwafor & Agyenim Boateng, 2021. "Board gender diversity and firm performance: The UK evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 5704-5719, October.
    8. Tanveer Bagh & Muhammad Asif Khan & Natanya Meyer & Hammad Riaz, 2023. "Impact of boardroom diversity on corporate financial performance," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.
    9. Low, Daniel C.M. & Roberts, Helen & Whiting, Rosalind H., 2015. "Board gender diversity and firm performance: Empirical evidence from Hong Kong, South Korea, Malaysia and Singapore," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 381-401.
    10. Laura Cabeza-García & Esther B. Brío & Carlos Rueda, 2021. "The moderating effect of innovation on the gender and performance relationship in the outset of the gender revolution," Review of Managerial Science, Springer, vol. 15(3), pages 755-778, April.
    11. Mohamed Marie & Hany Kamel & Israa Elbendary, 2021. "How does internal governance affect banks’ financial stability? Empirical evidence from Egypt," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(3), pages 240-255, September.
    12. Adeel Mustafa & Abubakr Saeed & Muhammad Awais & Shahab Aziz, 2020. "Board-Gender Diversity, Family Ownership, and Dividend Announcement: Evidence from Asian Emerging Economies," JRFM, MDPI, vol. 13(4), pages 1-20, March.
    13. Nooraisah Katmon & Zam Zuriyati Mohamad & Norlia Mat Norwani & Omar Al Farooque, 2019. "Comprehensive Board Diversity and Quality of Corporate Social Responsibility Disclosure: Evidence from an Emerging Market," Journal of Business Ethics, Springer, vol. 157(2), pages 447-481, June.
    14. repec:eme:parpps:par-08-2019-0099 is not listed on IDEAS
    15. Lucas, Ryley & Gunasekarage, Abeyratna & Shams, Syed & Edirisuriya, Piyadasa, 2021. "Female directors and acquisitions: Australian evidence," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    16. Michael Olbrich & Anna E. Nikolis & David J. Rapp & Katrin V. Weber, 2016. "Do Political Parties Play Dirty in the Discussion on Gender Balanced Boards? Evidence from Germany," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 17(3), pages 361-399, December.
    17. Marcelo Eduardo & Brooks Poole, 2016. "CEO age and gender: Subsequent market performance," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1146389-114, December.
    18. Saif Rehman & René Orij & Hashim Khan, 2020. "The search for alignment of board gender diversity, the adoption of environmental management systems, and the association with firm performance in Asian firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2161-2175, September.
    19. Yongbae Lee & Pyung Kim & Jungsik Yang, 2019. "Building a Knowledge Base for QA System by Linking Korean Vocabulary and Wikipedia," International Journal of Higher Education, Sciedu Press, vol. 8(3), pages 103-103, June.
    20. Sarkar, Jayati & Selarka, Ekta, 2021. "Women on board and performance of family firms: Evidence from India," Emerging Markets Review, Elsevier, vol. 46(C).
    21. Tleubayev, Alisher & Bobojonov, Ihtiyor & Gagalyuk, Taras & Glauben, Thomas, 2020. "Board gender diversity and firm performance: Evidence from the Russian agri-food industry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23(1), pages 35-53.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:5:y:2017:i:3:p:17-:d:109796. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.