BOARD DIVERSITY, INDUSTRY SPECIFICITY, AND FIRM PERFORMANCE

Industry specificity is important to affect board diversity-performance relationship. Prior studies are flawed by assuming that Malaysian industries are homogenous, and industry peculiarities might not be captured by the aggregate results of all firms in the country. The ability of board diversity to boost firms’ performance could be affected by a specific nature of the industries. The purpose of this study is to examine the combined effect of board diversity on firm performance. We also examined the moderating role of industry specificity on the board diversity-performance relationship. Data were collected from 180 listed firms in Malaysia for the period of 2012 to 2016 to avoid the implication of the Companies Act 1965 revamp in late 2016 and the latest MCCG reform in 2017. Data were analysed using the random effect panel data regression to test the research hypotheses. The findings suggest that firm performance is influenced by the combined effects of board diversity dimensions. The findings confirmed the importance of industry effect indicated by the variations of board diversity-performance relationship across industries. Other significant factors include firm’s growth, size, and leverage. Thus, different industries in Malaysia should utilize a distinguished corporate governance framework to improve firm performance according to their industry specificities. The findings of this study contribute to the body of knowledge by expanding the role of board diversity in the context of industry specificity.   Keywords: Board diversity, corporate governance, firm performance, Malaysia, sectorial analysis   Cite as: Amin, S. I. M., Rahmat, M. M., & Mohd Asri, A. K. (2019). Board diversity, industry specificity, and firm performance. Journal of Nusantara Studies, 4(2), 45-69. http://dx.doi.org/10.24200/jonus.vol4iss2pp45-69