THE RELATIONSHIP BETWEEN BOARD SIZE, BOARD EDUCATIONAL DIVERSITY AND PERFORMANCE

Abstract

board of directors has the responsibility to increase shareholder wealth through providing better dividends in order to secure their investments, and this situation puts pressure on a board to work hard. Having a better qualification of education among directors is beneficial for firms because more ideas are able to be generated. Furthermore, the board size is linked to the number of directors with educational diversity, which may lead to better performance. The objective of this study was to investigate the relationship between board size and performance, as moderated by board diversity, especially regarding education and gender. The sample for this study was made up of 337 firms listed on Bursa Malaysia with panel data of 674 firms in existence from 2015 to 2016. This study did not find evidence that educational diversity is able to influence the relationship between board size and firm performance. The findings addressed that educational qualifications among directors are insignificant in influencing firm performance. Firms do not only depend on qualifications among the board of directors to achieve firm performance. Furthermore, this study found a positive and significant relationship between board size and firm performance.