Open AccessThe Relationship between Board Diversity, Board Independence and Corporate Fraud
Author(s) -
Noor Hasniza Haron,
Nazhatul Afzan Abdul Halim,
Norhayati Alias
Publication year - 2021
Publication title -
advances in business research international journal
Language(s) - English
Resource type - Journals
eISSN - 2462-1838
pISSN - 2462-1455
DOI - 10.24191/abrij.v7i1.10108
Subject(s) - accounting , gender diversity , business , independence (probability theory) , corporate governance , diversity (politics) , sample (material) , principal–agent problem , audit committee , on board , audit , political science , finance , statistics , law , engineering , chemistry , mathematics , chromatography , aerospace engineering
This study examines the relationship between board diversity, board independence and corporate fraud. This study employs agency theory to support the hypotheses. This study examines a sample of 42 companies that are listed on Bursa Malaysia, comprising 21 fraudulent companies and 21 non-fraudulent companies during the period from 2013 until 2017; with two firm-year observations which brings to eighty-four firm-year observations altogether. This study uses secondary data that have been obtained from the narrative information of the Corporate Information section of the annual reports of the said sample companies. This study uses binary logistic regression analysis to examine whether there is significant relationship between board diversity and board independence and corporate fraud. The results evidence significant relationship between gender diversity, board experience and board independence and corporate fraud whereby the increase in the number of women directors, a mixed of directors with industrial and accounting/finance experience and independent directors decrease the likelihood of the occurrence of corporate fraud. On the other hand, the results fail to document any relationship between board age and board education and corporate fraud.