The relationship between board diversity, board independence and corporate fraud / Noor Hasniza Haron, Nazhatul Afzan Abdul Halim and Norhayati Alias

• Main Authors: Haron, Noor Hasniza, Abdul Halim, Nazhatul Afzan, Alias, Norhayati
• Format: Article
• Language: English
• Published: Universiti Teknologi MARA 2021
• Subjects: Management. Industrial Management; Financial management. Business finance. Corporation finance
• Online Access: https://ir.uitm.edu.my/id/eprint/49500/1/49500.pdf; https://ir.uitm.edu.my/id/eprint/49500/; http://myjms.mohe.gov.my/index.php/ABRIJ/issue/view/1190
• Institution: Universiti Teknologi Mara

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.