Impact of gender diversity on social and environmental performance: evidence from Malaysia

This study is guided by the upper echelon theory and argues that the role of females on boards of directors may differ between cultures. In a culture where the community has a significant humane orientation, female directors may pay much more attention to the social issues of corporate sustainability rather than environmental issues. Therefore, this study aims to differentiate between the social and environmental performances of companies to examine whether the presence of females on the boards of directors of Malaysian firms could affect social and environmental performances differently.

This study uses a sample of firms listed in Bursa Malaysia and develops two disclosure indices to measure social and environmental performances. Three proxies of female directors are used in the empirical models. The ordinary least square model is used to test the hypothesis.

The empirical results suggest a positive association between social performance and the presence of female directors on the board of directors of Malaysian firms. However, no association was found between environmental performance and the presence of female directors on those boards. These results confirm the prediction of this study that the female directors of Malaysian firms pay more attention to social issues than to environmental ones.

This is the first study to examine the effects of the presence of female directors on Malaysian firms’ boards of directors on social and environmental performance. It also contributes to the upper echelon theory by illuminating the importance of gender diversity in influencing the social and environmental behaviors of corporate leaders. The results provide the important implication that the association between a firm’s social and environmental performance and gender diversity depends on the culture within which the company operates.