Would diversified corporate boards add value? The case of banking institutions in Malaysia

Board diversity has gained increasing attention and has been widely posited as a driver for firm value. The purpose of this paper is to provide empirical evidence on the relation of gender diversity of corporate boards with the value of banking institutions in Malaysia.

The sample comprised of ten banking institutions listed on Bursa Malaysia with data observations from 2007 to 2016. Panel data techniques were employed to investigate the relationship between having female directors and firm performance in terms of values generated as indicated by Tobin’s Q.

The results revealed a positive relationship between the proportion of female director and the value of the bank. Interestingly, this study found that appointment of female independent directors tends to be negatively related to the value of such institutions.

There remains a shortage of research studying the impact of gender equality on corporate boards in Malaysia generally and in the banking sector specifically. Thus, this study contributes a significant knowledge on the value implication of board diversity. The findings also provide useful insights on the developmental policy initiated by the government to increase female participation in the top management.

This study contributes to the literature by bridging the knowledge gap on board diversity in the governance structure of banking institutions. It also provides theoretical contributions to the development of regulatory policy in relation to gender diversification in corporate leadership.