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

Abstract

Purpose The purpose of this paper is to investigate the effects of women on board moderated by firms’ competitive advantage on firms’ environmental, social and governance (ESG) disclosures. Design/methodology/approach The sample consists of 332 firm-year observations from the year 2012 to 2017 of 65 firms listed in Bursa Malaysia. To improve the robustness of this analysis, the authors adopt clustering techniques in the regression analysis. Sensitivity analysis is also conducted using two-stage least square regression and robust standard errors for panel regression with a cross-sectional dependence approach. Findings The findings of this research indicate that women on board encourage ESG and environmental disclosures. Nonetheless, in competitively advantaged firms, the authors find that the interaction between WOMENPER and COMADVANTAGE is negatively influencing ESG scores. However, no evidence is found to indicate that women on board in a competitively advantaged firm have an effect on the environmental scores of a firm. Research limitations/implications The findings urge regulators to ensure the appointment of qualified and competent women on board, particularly in competitively advantage firms. Practical implications Though firms with more women on board are associated with better ESG disclosures and environmental disclosures, the author’s additional analysis found that this is less pronounced in competitively advantage firms. Since a number of the competitive firms are owned by family firms as well as government-linked firms, the appointment of women should not be based on directors’ affiliation, network and family relationships. Originality/value To the best of authors’ knowledge, this is one of the few studies which seek to investigate women’s appointment in competitive advantage firms.