Effect of board diversity on corporate governance structure and operating performance: evidence from the UK listed firms*
This study expands the model of corporate governance to incorporate moderating effect of board diversity. It also investigates the relationship between internal corporate governance structures and firm performance and how this relationship is moderated by the influence of board diversity. The data...
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| Format: | Article |
| Language: | English |
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Penerbit Universiti Kebangsaan Malaysia
2016
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| Online Access: | http://journalarticle.ukm.my/10754/ http://journalarticle.ukm.my/10754/ http://journalarticle.ukm.my/10754/1/10673-43529-1-PB.pdf |
| Summary: | This study expands the model of corporate governance to incorporate moderating effect of board diversity. It also
investigates the relationship between internal corporate governance structures and firm performance and how this
relationship is moderated by the influence of board diversity. The data of the study, which were extracted from annual
reports of the UK FTSE 350 firms, were treated statistically using OLS-moderating multiple regression analysis. The
coefficients provide evidence that the proportion of outside directors, board size, board diversity are significantly
positively related to operating performance (ROA). The empirical evidence also indicates that the moderating effect of
board diversity strengthens the relationship between outside directors and operating performance as well as between
board size and operating performance. By implication, the result suggests that Agency Theory must explicitly indicate
that board diversity plays important moderating role in corporate governance. |
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