Women on boards, firms’ competitive advantage and its effect on ESG disclosure in Malaysia

Mohammad, Wan Masliza Wan; Zaini, Rapiah Mohd; Kassim, Aza Azlina Md

doi:10.1108/srj-04-2021-0151

Cited by 23 publications

(14 citation statements)

References 61 publications

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“…Several studies on the various board characteristics as determinants of ESGD have been identified. Board gender diversity and board independence have been consistently proven to have a positive impact on ESGD (Arayssi et al, 2020; Chebbi & Ammer, 2022; De Masi et al, 2021; Ellili, 2023; Gurol & Lagasio, 2023; Lavin & Montecinos‐Pearce, 2021b; Ozcan, 2019; Wan Mohammad et al, 2023). However, there were contrary findings where board gender diversity (Husted & de Sousa‐Filho, 2019; Ismail & Latiff, 2019) and board independence (Ismail & Latiff, 2019) negatively impact ESGD.…”

Section: Results and Findingsmentioning

confidence: 99%

“…At the country level, reporting regulations (Lokuwaduge & Heenetigala, 2017) and stock exchange membership (Weber, 2014) have a positive influence on ESGD, whereas democracy and political stability negatively impact ESG performance (Mooneeapen et al, 2022). Huang et al (2022) Board gender diversity and board independence have been consistently proven to have a positive impact on ESGD (Arayssi et al, 2020;Chebbi & Ammer, 2022;De Masi et al, 2021;Ellili, 2023;Gurol & Lagasio, 2023;Lavin & Montecinos-Pearce, 2021b;Ozcan, 2019;Wan Mohammad et al, 2023). However, there were contrary findings where board gender diversity (Husted & de Sousa-Filho, 2019;Ismail & Latiff, 2019) and board independence (Ismail & Latiff, 2019) negatively impact ESGD.…”

Section: Determinants Of Esgdmentioning

confidence: 99%

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Determinants of environmental, social, and governance disclosure: A systematic literature review

Seow

2023

Bus Strat Env

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The popularity of environmental, social, and governance (ESG) investing or socially responsible investing is pushing private sectors to improve their ESG performance. Stakeholders, namely, investors, are relying on firms' environmental, social, and governance disclosures (ESGD) to evaluate their ESG performance and strategize their investment decision‐making. Since firms have substantial discretionary power in deciding the quantity and quality of ESGD, understanding the drivers and motivations of ESGD is paramount. This study examines the literature on the determinants of ESGD, and 36 articles published in a period spanning from 2006 to 2022 were analyzed and synthesized via a systematic literature review approach. Ninety‐one researchers from 30 countries contributed to these studies. Of these studies, 28% perform cross‐country investigations. This study found that although there is no single underpinning theory for ESGD, ESGD determinant studies are well supported by multiple theoretical frameworks, such as stakeholder theory, legitimacy theory, and institutional theory. This study reveals many factors that have an impact on ESGD, such as natural disasters, political and legal systems, ownership structure, board characteristics, and the CEO's characteristics. This study contributed to the burgeon of literature on ESG by offering valuable insights into the antecedents to ESG performance and facilitating future enhancements of a better ESGD framework. Lastly, this study also reveals future research directions for scholars to enrich the burgeoning literature in ESG.

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Section: Results and Findingsmentioning

confidence: 99%

Section: Determinants Of Esgdmentioning

confidence: 99%

Determinants of environmental, social, and governance disclosure: A systematic literature review

Seow

2023

Bus Strat Env

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“…The first method uses the STATA-based command xtscc, which calculates the standard error for panel regression with cross-sectional dependency using the Driscoll–Kraay estimator (Driscoll and Kraay, 1998). Following prior research (Le et al , 2020; Wan Mohammad et al , 2022), the method was selected because it is heteroskedasticity consistent, and the standard error estimates are robust to general forms of cross-sectional and temporal dependence, surpassing the shortcomings of traditional panel data statistical approaches (Hoechle, 2007). This study also provides a fixed-effects regression with a robust standard error for comparative analysis.…”

Section: Methodsmentioning

confidence: 99%

Cost of capital and firm performance of ESG companies: what can we infer from COVID-19 pandemic?

Tanjung

2023

SAMPJ

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Purpose Studies on sustainable finance examine how it is interrelated with economic, social, governance and environmental issues. Using financial data on publicly traded firms in Indonesia, this study aims to explore the interplay between the cost of capital, firm performance and the COVID-19 pandemic. Design/methodology/approach This study uses firm-level data sets of publicly listed firms from 2012 to 2021. The regression analysis reported in the study includes the Driscoll–Kraay estimator, propensity score matching model and fixed-effects regression. Findings The study revealed three significant findings. First, on average, non-environmental, social and governance (ESG) companies’ cost of capital is lower than that of ESG firms. Second, ROE in ESG enterprises is significantly impacted by capital costs. Third, the cost of capital has a negative impact on the market value (Tobin’s q) of non-ESG firms. The study specifically shows that after accounting for the pandemic, ESG firms did not benefit during the troubled COVID-19 crisis after controlling for the pandemic dummy years of 2020 and 2021. These results indicate that the adoption of green or sustainable finance is still in its infancy and that the sector requires more time to establish an enabling environment. Research limitations/implications This study benefits from capital structure and ESG theories. It supports the argument that the debt utilization ratio is still relevant to a company’s value because it affects its financial performance. Moreover, adopting ESG principles helps businesses survive crises. Thus, the analysis confirms the superiority of ESG-based firms. Practical implications This study draws two conclusions. First, the results could be a reference for academics and practitioners to understand the effect of pandemic-related crises on a firm’s capital structure and performance. In terms of survival during a crisis, such as the COVID-19 pandemic, this study demonstrates how firms with strong ESG may perform differently than those without ESG. Second, this study supports the need for an empirical study and examination of the development of sustainable finance in the country while considering setbacks. Social implications The results should be of interest to policymakers who focus on the ESG market and academics conducting ESG-related research on emerging markets. Originality/value This study contributes to the literature by establishing empirical evidence on the relationship between the cost of capital and firm performance of ESG- and non-ESG-rated enterprises in the Indonesian setting while controlling for the impact of the pandemic.

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“…They further asserted that women tend to focus on issues related to social issues rather than environmental issues. Using psychological theory on gender, Wan Mohammad et al (2022) demonstrated that females on boards are unable to enhance ESG disclosures in smaller and competitively less advantaged Malaysian firms. Recent literature reviews have observed that the majority of gender diversity studies are underpinned by economic and management theories, such as agency theory, upper echelon theory, stakeholder theory, institutional theory and legitimacy theory (Banno et al , 2021; Campopiano et al , 2022).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The impact of female representation and ethnic diversity in committees on environmental, social and governance performance in Malaysia

Wong

2023

SBR

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Purpose This study aims to explore how females on committees (FOC) and committee ethnic diversity (CED) impact environmental, social and governance performance (ESGP). Design/methodology/approach This study examines 126 listed firms under the coverage of FTSE ESG Ratings in Bursa Malaysia between 2017 and 2019. This study applies partial least squares structural equation modeling (PLS-SEM) to examine the hypotheses. While the risk of common method variance is minimised using multiple data sources for the analysis, instrumental variable-free approach, i.e. Gaussian copula method which is implemented in SmartPLS 4.0 has been used to address the potential endogeneity of the model. Findings Empirical evidence demonstrates significant positive direct relationships between FOC and ESGP, as well as CED and ESGP. The argument of resource dependence theory and positive empirical results on the two direct relationships hold firm despite several committees being aggregated as one construct with the aim of providing different insights into the literature. Practical implications This study provides implications for firm leadership to consider reviewing the composition of committees by increasing female representation while striking a balance in the appointment of committee members of different ethnicities to enhance firm ESGP. Originality/value To the best of the author’s knowledge, this study adopts a holistic approach by capturing, for the first time, the female representation of audit, nomination, remuneration and risk management committees. These dimensions are further developed into a single quantifiable variable, presented as FOC. Similarly, the ethnic diversity of the respective committees is aggregated and developed into a single quantifiable construct: the CED. Unlike most existing studies that commonly use econometric software, the application of PLS-SEM in this study contributes to the limited body of corporate governance and ESG studies that use PLS-SEM.

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Women on boards, firms’ competitive advantage and its effect on ESG disclosure in Malaysia

Cited by 23 publications

References 61 publications

Determinants of environmental, social, and governance disclosure: A systematic literature review

Determinants of environmental, social, and governance disclosure: A systematic literature review

Cost of capital and firm performance of ESG companies: what can we infer from COVID-19 pandemic?

The impact of female representation and ethnic diversity in committees on environmental, social and governance performance in Malaysia

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