Asia’s Board Diversity: Does Director Diversity on Board Affect Firm Performance?

Abstract

Some countries in Europe have passed laws that require every company to have a woman on the company's board of directors. Asia still does not have legislation as in some countries in Europe, so women's board office companies in Asia are small or nonexistent. In this study, board diversity was measured by 4 variables; these are gender diversity, age of director, director's educational background, and outside director, with board size and firm size as control variables, while firm performance is measured by using return on asset. The population in this study was companies included in Forbes Asia's 50 Best Big Public Companies of 2014-2016. The results show that board diversity does not affect the performance of the company.

The Effect of Intellectual Capital, Director’s Educational Background, Islamic Social Reporting, and Firm Size on the Performance of Sharia Maqashid

“…In line with research conducted by Adams & Ferreira (2009), Darmadi (2013), Devi (2018), and Madyan et al (2021) stated that the educational background of the board of directors has a positive effect on performance. This means that the innovative thinking of master's degree graduates and above can be used to streamline the strategic decision-making process, and the results of decision-making can also improve performance.…”

“…The maqashid sharia index (MSI) was developed on the basis of three key elements, namely personal education, the creation of justice, and the achievement of welfare, where these three factors are used to achieve the general objectives of maqasid sharia, namely achieving prosperity and avoiding evil (Wahid et al, 2018). The performance of this sharia maqashid can be influenced by Intellectual Capital (Ramadhan et al, 2018), the Board of Director's Educational Background (Devi, 2018), Islamic Social Reporting (Adisaputra, 2021b), and Firm size…”

“…This is because by utilizing this education, the board of directors can make the best decisions and actions that can improve the performance of maqashid sharia. There is also research that explains the positive influence of directors' educational background on banking performance (Adams & Ferreira, 2009;Devi, 2018;Madyan et al, 2021) which can be proxied by the maqashid sharia index. That is, the higher the education level of the board of directors, the higher the performance of maqashid sharia.…”