Boardroom gender diversity and firm performance: from the lens of voluntary regulations, “tokenism” and “critical mass”

This study inquires the impact of the third Malaysian Code on Corporate Governance (MCCG 2012) introduced in March 2012 on the level of Boardroom Gender Diversity (BGD) and its possible association with Firm Financial Performance (FFP). To capture the difference, if any, the study compares a stratified random sample of 300 non-financial companies listed on Bursa Malaysia (Malaysia’s Stock Exchange) in 2 years (2010–2011) pre and 3 years (2012–2014) post-enactment period of the code. The descriptive statistics disclosed that BGD has slightly increased after the enactment of the code. The use of Panel Corrected Standard Errors (PCSEs) further revealed that even a tiny increase in BGD has pronounced its significant positive impact on FFP (ROA and decreasing stock volatility) after the enactment of the code. Interestingly, it is also unveiled that neither ‘tokenism’ nor ‘critical mass’ hypotheses are applicable in the context of Malaysia. The study has several contributions and implications for the literature, policy and practice.