The Relationship Between Corporate Governance Mechanisms and Firm’s Performance Pre and Post-Malaysian Corporate Code Governance 2017: The Moderating Effect of Women Directors on Board

• Published in: Accounting, Finance, Sustainability, Governance and Fraud
• Main Author: Salisi S.L.; Joseph C.; Said R.
• Format: Book chapter
• Language: English
• Published: Springer Nature 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85188831234&doi=10.1007%2f978-981-99-9145-7_9&partnerID=40&md5=53d1869a4150e776552a12fb63b7487d

The composition of the board especially the inclusionInclusion of womenWomen directors on the board has attracted scholarly interest and public debate. The empirical evidence has failed to build a holistic case to support the womenWomen director’s influence on the world. In line with the revision of the Malaysian Code of Corporate GovernanceGovernance (MCCG) 2017, this study is carried out to ascertain the moderating effect of womenWomen directors’ participation on the relationship between corporate governanceGovernance mechanisms and firm performance before and after the revision. The components of corporate governanceGovernance mechanisms are; board independence, independence of auditAudit committee, director’s remuneration, risk management committee, and board meeting frequency. This study used Tobin’s Q as the proxy of firm performance. Companies listed on the main board of Bursa Malaysia were selected using a stratified random sampling method and relevant data were extracted from the annual report of selected companies for a period of the year 2015 and 2016 (before) and period of the year 2018 and 2019 (after) the revised code. Hierarchical regression analysis was used in over 200 selected public listed companies. The perspective of agency theory and resource-based view theory (RBVT) was applied to explain the relationship between corporate governanceGovernance mechanisms and firm financial performance. The findings suggest that womenWomen directors moderate the relationship between the independence of the auditAudit committee and firm performance before the MCCG 2017 revision. Meanwhile, the independence of the auditAudit committee and director’s remuneration was positively and significantly related to performance before the MCCG 2017 revision. After the MCCG 2017 revision, only the board meeting frequency was positively and significantly related to firm performance. It is important for the government and policymakers to review and revisit the MCCG 2017 and to reinforce the mandatory requirements of the code to be fully adopted by the public listed companies in Malaysia. © The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2024.