Journal of Cleaner Production 244 (2020) 118683

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Journal of Cleaner Production

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Boardroom gender diversity: Implications for corporate sustainability

disclosures in Malaysia
Muhammad Zahid a, *, Haseeb Ur Rahman b, Wajahat Ali c, Musa Khan d, Majed Alharthi e,
Muhammad Imran Qureshi f, Amin Jan g
a
Department of Management Sciences, City University of Science and Information Technology, Peshawar, Khyber Pakhtunkhwa, Pakistan
b
Institute of Management Sciences, University of Science and Technology, Bannu, Khyber Pakhtunkhwa, Pakistan
c
Sarhad University of Science and Information Technology, Peshawar, Khyber Pakhtunkhwa, Pakistan
d
Institute of Business and Leadership, Abdul Wali Khan University Mardan, Khyber Pakhtunkhwa, Pakistan
e
Finance Department, College of Business, King Abdulaziz University Rabigh, Saudi Arabia
f
Faculty of Technology Management and Technopreneurship, Universiti Teknikal, Melaka, Malaysia
g
Department of Management and Humanities, Universiti Teknologi PETRONAS, Seri Iskandar, Malaysia

a r t i c l e i n f o a b s t r a c t

Article history: This study aims to examine the impact of boardroom gender diversity, Malaysian Code on Corporate
Received 18 April 2019 Governance (MCCG, 2012), and firms’ specific characteristics such as age, size, and profitability, on
Received in revised form corporate sustainability disclosures (CSD) in Malaysia. The study applied Ordinary Least Square (OLS) to a
29 September 2019
stratified random sample composed of 878 public listed companies. These companies were selected in 11
Accepted 1 October 2019
Available online 7 October 2019
sectors of the Malaysian economy for three years i.e. 2011 to 2013. The selection of time period has a
rationale that Malaysia is mostly focused on improving both the corporate sustainability and repre-
Handling editor: Charbel Jose Chiappetta sentation of women directors on the board during this time. The results indicate that women directors
Jabbour have an imperative role in improving CSD as evident by their significant positive association with
workplace and social, environmental, and economic dimensions of corporate sustainability. In addition,
Keywords: the comparison of findings in pre and post contexts of MCCG 2012, it is noted that the association be-
Gender diversity tween boardroom gender diversity and CSD has pronounced after enactment of the code. The findings
Corporate sustainability disclosures are important, particularly in connection with a fast-growing and emerging economy like Malaysia. The
MCCG 2012
findings have important insights for various stakeholders i.e. government, regulatory bodies, practi-
Pre-post analysis
tioners, academia, industry, and researchers.
Emerging economies
Malaysia © 2019 Elsevier Ltd. All rights reserved.

1. Introduction the regulators and policymakers while added as an integral part of

Corporate sustainability disclosures (CSD) ensure the role and
contribution of firms towards sustainable development into three
main areas as social, environmental and economic sustainability
(Liao et al., 2018). The corporations ensure the protection of
different stakeholders by safeguarding their interests through CSD.
Hence, in today’s modern business age, CSD is considered as one of
the most important agendas especially in making strategic de-
cisions. it is reported that CSD related issues caught the attention of
* Corresponding author.
E-mail addresses: zahid@cusit.edu.pk (M. Zahid), haseebbabo@gmail.com
(H.U. Rahman), wajahat2613@gmail.com (W. Ali), immusakhan@gmail.com
(M. Khan), mdalharthi@kau.edu.sa (M. Alharthi), miqureshi80@gmail.com
(M. Imran Qureshi), amin.jan.khan@gmail.com (A. Jan).
the governance mechanisms and hence to the board of director
agendas (Harjoto et al., 2018). At present, stakeholders’ awareness
and media pressure have pushed firms for integrating sustainability
into their mission, vision, strategies, planning, and decisions. Being
part of the top management, the board of directors have a re-
sponsibility to ensure the protection of stakeholders’ interests by
perusing the agenda of CSD. The descriptive approach of the
stakeholder theory also posits that firms’ top management such as
board is responsible for managing the interests of a broad spectrum
of stakeholders (Donaldson and Preston, 1995). Some of these
managers, however, may lack the knowledge, expertise, supporting
behavior towards stakeholders and knowledge to integrate CSD
into company’s strategic decisions (Jain and Jamali, 2016). Among
others, having women on the board (gender diversity) could be one
of the possible solutions to boost and integrate CSD. It is argued that

https://doi.org/10.1016/j.jclepro.2019.118683
0959-6526/© 2019 Elsevier Ltd. All rights reserved.
2 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683
women on board sensitize boards to CSD initiatives and provide
perspectives which could be helpful in relation to promoting CSD.
Focusing on the crux of gender socialization theory, firms having
female representation on the board are less often violate environ-
mental concerns (Liu, 2018). Moreover, the theory also postulates
that women are more concerned with the welfare of stakeholders,
making them more likely to take actions to promote social welfare
and protect the environment to be harmed (Adams et al., 2011). The
above traits are expected to reduce firms’ exposure to CSD related
risks (Liu, 2018). Women, as compared to men, are more kind,
humble, helpful and sympathetic which assist and safeguard the
interests of stakeholders. Many studies found that women directors
have high concerns for the welfare of the people, society, and the
environment (Liu, 2018; Nadeem et al., 2017). It is also noted that
women have friendly and positive behavior towards philanthropic,
charitable and ethical issues and activities (Post et al., 2015). Like-
wise, outside of work, female directors show more interest than
male directors in community services and philanthropic activities
(Groysberg and Bell, 2013). Accordingly, many developed and
emerging economies like Norway, Belgium, France, Germany, and
Malaysia implemented laws/regulations as well as reserved quotas
for increasing the representation of women directors on the board
at the start of the twenty-first century (Ahern and Dittmar, 2012;
Eversheds Report, 2013). In the light of the above discussions, it is
inferred that women directors on the board have a positive role in
promoting CSD. Further, it has been documented that CSD entered
into a mature stage in developed countries, but it is of less interest
and attention, and thus lagging behind in developing countries
(Dissanayake et al., 2016). However, the focus has now been
diverted towards the development and promotion of CSD in
developing and emerging economies. Similarly, the representation
of women directors on the board is also an issue of great concern
and theme of discussion among the stakeholders. Like others,
Malaysia is not only keen to promote CSD but also committed to
improving the representation of women as directors on the boards.
The Bursa Malaysia (the Malaysian stock exchange formerly known
as Kuala Lumpur Stock Exchange) has promulgated regulatory en-
deavors for encouraging CSD in public listed companies of the
country. The corporate governance code - MCCG 2012 introduced in
March 2012, also stressed upon focusing and perusing CSD and
related strategies in business operations. Moreover, the code also
recommends improvement in boardroom gender diversity (Zahid
et al., 2018).
In view of these, there is a need to investigate the impact of the
code (if any) in improving the representation and role of women
directors in promoting CSD. The investigation has a rationale that
CSD mostly examined in relation to its level of compliance in the
Malaysian context (Katmon et al., 2017). Furthermore, these studies
provide the evidence that CSD is in the evolutionary stage in
Malaysian public listed companies. Hence, to improve these prac-
tices, companies require a push from the internal forces particularly
from the board of directors by increasing boardroom gender di-
versity among others (Harjoto et al., 2018). Some studies are
focused on other internal factors investigating the association of
CSD with firms’ specific characteristics such as age, size, nature and
financial performance of firms (Rodriguez-Fernandez, 2016).
However, in addition to incongruent results, these studies also
missed the direction to explore or investigate the relation of some
other factors such as boardroom gender diversity that may affect
the level and compliance of CSD.
Besides these, the selection of study period i.e. 2011e2013 has
many rationales. For instance, it was the time when the Malaysian
government focused on both the boardroom gender diversity and
CSD. Also, the period covered by the 10th Malaysian plan
(2011e2015) which focuses to push public listed companies to-
wards sustainable industrialization which is one of the three goals
of New Economic Model (NEM) 2010 and vision 2020 of Malaysia.
NEM aims to include Malaysia into panel of developed nations in a
sustainable manner, for which the country stressed upon the
corporate sector (Zahid and Ghazali, 2015). Moreover, Securities
Commission Malaysia also introduced the third corporate gover-
nance code (e.g., MCCG 2012) of the country during this time
period. Among others, the code recommended improving the
representation of women directors on the board and CSD for
enhancing the confidence of stakeholders in a sustainable manner.
Hence, the current study investigates the above-proposed link of
gender diversity and CSD in light of the discussed recommenda-
tions by the regulatory bodies. The investigation of the proposed
relationship in a regulatory context will be carried out to compare
the pre and post contexts of the MCCG 2012 which is believed to be
a certain contribution of the current study. Most of the earlier
literature in a regulatory context mainly focused on the nexus be-
tween corporate governance and firms financial performance
(Rahman et al., 2017a).
Hence, the current study aims to answer the research questions
that: what is the potential role of gender diversity in improving CSD
in Malaysian public listed companies from 2011 to 2013? How does
gender diversity impact CSD as a sole construct, as well as separate
dimensions of CSD (social, environmental, workplace, and eco-
nomic)? The study also tries to answer the status of the above re-
lationships in pre and post context of the promulgated code i.e.
MCCG 2012?
Besides answering the above research questions and filling the
exhibited gap in the literature, the current study provides impor-
tant insights for policy and practice in emerging countries such as
Malaysia. This study has important contributions to the body of
knowledge. Firstly, the majority of previous studies were based on
developed countries (Boulouta, 2013) and overlooked developing
and emerging economies. The current study offers evidence from
an emerging country where the subject is not yet fully explored
(Katmon et al., 2017). Moreover, it is also noted that most of the
studies on CSD in emerging economies particularly Malaysia
narrowly focused on the level of CSD only and could not pay
attention to the correlational or causal aspects of the subject. Sec-
ondly, unlike previous studies which mainly work on the readily
available data such as Kinder, Lydenberg, Domini Research, and
Analytics (KLD) rating and non-comprehensive index of limited
items as a proxy for CSD of Malaysian public listed companies.
Hence, this study uses a comprehensive CSD index of 42 items
based on the Global Reporting Initiatives (GRI) and Bursa Malaysia
recommendations including social (community), economic
(marketplace), environmental and workplace sustainability.
Thirdly, the current study has a theoretical significance to apply the
assumptions of stakeholder and gender socialization theories in
investigating the role of boardroom gender diversity for improving
CSD and it’s dimensions i.e. social, environmental, workplace and
economic. Fourthly, the study examines the impact of the corporate
governance code (MCCG 2012) in pre and post context on the
relationship of boardroom gender diversity and CSD. Finally, the
study has a practical implication to identify the level of women
representation on board and CSD in Malaysian public listed
companies.
The following section deals with the literature review and hy-
potheses development while the next sections address research
methods, results, and discussions of the study. The last section re-
ports the conclusion and recommendations of the study.
 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683
2. Literature review and hypotheses development
2.1. Conceptualize corporate sustainability disclosures
The World Commission on Environment and Development
(WCED) report “Our Common Future”, known as the Brundtland
Report, was considered as an evolution of sustainability, which was
retitled in a broad concept of sustainable development (Sen, 2013).
This report coined the definition of sustainable development as
“sustainable development is the development that meets the needs of
the present without compromising the ability of future generations to
meet their own needs” (WCED, 1987). A number of scholars have
followed the definition of the WCED to conceptualize sustainability,
at the firm level, consisting of three interconnecting dimensions
namely, economic, social and environmental (Elkington, 1997). This
emerged the concept and definition of corporate sustainability as:
“meeting the needs of a firms’ direct and indirect stakeholders (such as
shareholders, employees, clients, pressure groups, communities, etc.),
without compromising its ability to meet the needs of future stake-
holders as well” (Dyllick and Hockerts, 2002). In 2001, the collabo-
ration between the United Nations Environmental Program (UNEP)
and the Coalition from Environmentally Responsible Economies
(CERES), the Global Reporting Initiatives (GRI) has been established.
It explains certain dimensions and key stakeholder’s issues
involved by the business firms, as explained in Appendix 1 of the
study.
2.2. The Malaysian Context
The importance of CSD is also noted in the initiatives, strategic
decisions and policies of the government of Malaysia. Before
announcing a formal comprehensive or a categorical framework for
the development of CSD in Malaysia, the government considered it
in its various five years plans. However, these plans mostly focused
on the development and perusal of social and environmental as-
pects of sustainability. The efforts for initiating CSD as a compre-
hensive approach in the country are linked to the budget speech of
former Prime Minister, Dato’ Seri Abdullah Ahmad Badawi in
September 2006 that required all the public listed companies to
disclose their contribution in this regard by reporting into their
annual reports with effect from financial year ending 31 December
2007. Likewise, Bursa Malaysia also introduced the CSD framework-
composed of four dimensions in 2006. These dimensions were
included community, workplace, environment and marketplace
(Zahid and Ghazali, 2015). The Bursa Malaysia also defines CSD as
transparent business practices based on ethical values and respect
for the community, employees, environment, shareholders and
other stakeholders. In short, Bursa explains CSD as a mechanism
that could deliver sustainable value to society at large. Despite
these, the contents, quality, and quantity of the disclosures in
annual reports of the companies are voluntary and at the discretion
of their management.
The introduction of government initiatives and relevant regu-
lations (the MCCG 2012 and Bursa Malaysia listing requirements)
for the improvement of CSD and gender diversity could not
significantly improve the overall reporting of CSD of the Malaysian
public listed companies as noted by the prior literature that the
level of compliance to CSD is low in Malaysian public listed com-
panies (Atan and Razali, 2013; Nazli et al., 2013). The authors
further noted that these companies are too passive to adopt the
practices of CSD. The literature also documented that companies in
Malaysia are still not acquainted with the extent, nature or quality
of CSD and their reporting. A study of the 250 largest Malaysian
companies reported that most of the disclosures related to CSD are
declarative and non-quantitative in nature (Thompson and Zakria,
3
2004). Another study covering a period from 2005 to 2007 using a
method of the content analysis reported that the CSD or its
reporting is just moderate; not having a high standard (Atan and
Razali, 2013). A study using the data related to environmental, so-
cial and governance (ESG) aspects of sustainability in China,
Denmark, Malaysia, and South Africa reported that there is signif-
icant heterogeneity or no uniformity in disclosing and reporting all
these practices. The findings of the study unveiled that among
others, Malaysian firms could not mark any significant growth in
the adoption of CSD (Loannou and Serafeim, 2012). However, some
studies found that reporting quality of CSD is improving with the
passage of time in the country (Zahid and Ghazali, 2015). Based on
this, there is a need to investigate the current level of CSD and its
reporting in a developing country like Malaysia which is not famous
for good compliance with voluntary regulations (Zahid et al., 2018).
2.3. Theoretical framework -stakeholder theory
The stakeholder theory provides underpinning to any study
related to business stakeholders and society. The theory suggests
that as organizations operate in society and thus has a re-
sponsibility for its welfare for reimbursing the damage done by
them through creating noise and polluting environment (Freeman,
1984). The theory postulates that success and sustainability of the
organizations mainly rely on the fact that how well they serve their
stakeholders. This emerging trend is increasing firms’ re-
sponsibilities by shifting their earlier focus only on shareholders to
a wide spectrum of stakeholders. The author explained that
stakeholders are the individuals, or group of individuals, who
affected or to be affected by the operations of organizations. In view
of this, government, society and public, shareholders, creditors,
employees, suppliers, and natural environment all are included in
the stakeholders. Accordingly, organizations are responsible to look
into the interests of shareholders by concentrating on the well-
being of individuals and society (Donaldson and Preston, 1995).
The descriptive approach of the stakeholder theory assumes the
strategic orientation towards the satisfaction of stakeholders along
with the maximization of shareholders’ wealth. It describes and
explains specific firm characteristics and behaviors in order to
manage the CSD of a firm. Hence, based on the postulations of
stakeholder theory it is proposed that boardroom gender diversity
pronounces to improve CSD. Furthermore, it is also argued the
women contribute a diverse, non-traditional and professional
approach to the boardroom. They are regular and participative
which improves firms’ financial performance by enriching their
understanding of the customers’ needs and marketplace. The new
and divergent perspective increase sale and profits of the firms by
enriching the quality of their corporate strategies, products, and
services as well as stakeholders’ welfare (Jiao, 2010).
2.4. Gender socialization theory
Gender socialization theory suggests that women and men are
different especially in regard to ethical issues due to their early
experiences through social interactions (Gilligan, 1982; Rahman,
Ibrahim and Che-Ahmad, 2017b). Women are more aware, con-
cerned and caring for others’ needs and thus sensitive to ethical
issues (Ibrahim et al., 2009). Empirical evidence also endorses these
gender differences in ethical considerations and decision making
(Liu, 2018). Furthermore, it is noted that female executives are more
receptive to the code of ethics than their male counterparts
(Ibrahim et al., 2009). These gender differences influence firms’
policies and thus firms with female directors on the board are less
likely to indulge in unethical practices, frauds, earnings manage-
ment, and tax evasions (Liu, 2018). The authors found that “women
4 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683
directors are less power-oriented as compared to men by having
strong traits of kindness and passion which encourage the under-
standing and protection of people and nature” (Adams et al., 2012).
Hence, firms with female directors on the board are associated with
higher charity, donations and other CSD related activities (Bear
et al., 2010). Moreover, managers and directors with power-
orientation and higher passion and universalism have a greater
inclination towards stakeholders beyond shareholders. In view of
this, female directors are more likely to have concerns for a wide
range of stakeholders and assist the formulation of strategies which
could decrease environmental violations. As per the postulations of
gender socialization and ethicality theories, a relationship exists
between female directors and CSD which could be free of any
financial implication as evident by the incongruence of the prior
extant literature (Fernando et al., 2017).
2.5. Hypotheses development
2.5.1. The link between women directors and CSD
Diversity or heterogeneity has recently caught much of the
attention in the literature related to policy, and board of directors
(Bear et al., 2010). Boardroom diversity accounts for race, nation-
ality, age, education, experience, and gender of the directors on the
board. Being double-edged sword that causes potential conflicts
and tensions (Jehn, 1995), boardroom diversity is also beneficial for
enhancing creativity; knowledge, innovation, and generating a
competitive advantage (Carter et al., 2003). To be more opportu-
nistic and hence believing in the positive aspect of boardroom di-
versity, this study assumes that diversity in gender on the board has
a positive role in improving CSD (Galbreath, 2011). It is due to the
fact that women as compared to men are more responsive towards
the environment, society and thus CSD (Jain and Jamali, 2016). A
meta-analysis found that women show more concern than their
men counterparts on the board over the environment (Davidson
and Freudenburg, 1996). Moreover, considering the heightened
environmental concerns of women as compared to men, it is ex-
pected that they will positively influence the formation of renew-
able energy alliances (Post et al., 2015). In an interview-based study
of 50 women directors of Fortune 1000 firms found women’s active
involvement in organizational strategy for developing new product
and market (Konrad et al., 2008). A survey of business students
revealed that they prefer women over men in observing ethical
values. The caring and ethical characteristics of women come to
limelight especially when they assume higher positions in organi-
zations. Compared to men, they also place more emphasis on self-
transcendent values towards social responsibility (Adams et al.,
2012). The literature provides many rationales for the motivation
of women to exhibit a more friendly behavior towards philan-
thropists and other activities of social welfare such as psychological
edge that safeguards stakeholders’ interests, women unique lead-
ership styles, a significant difference in thinking, different beliefs
and values of men and women (Groysberg and Bell, 2013).
The proponents of the above view also report that if firms want
to be truly sustainable, they require to demonstrate outstanding
results in social, environmental and economic sustainability as
these are all necessary means of sustainable development and leads
toward the cleaner production (Dyllick and Hockerts, 2002;
Galbreath, 2018). Furthermore, if a single dimension has any sys-
tematic prominence over other dimension(s), this could undermine
the goals of the overall CSD (Hahn et al., 2010). Women directors
more diligently see and collect information in order to emphasize
the positive aspects of the opportunities arising from social, envi-
ronmental, and economic sustainability in order to achieve the
overall CSD of the firm (Galbreath, 2018). Studies documented
positive relationship between boardroom gender diversity and
firms CSD (Harjoto et al., 2015; Katmon et al., 2017). Female di-
rectors, likewise have a significant positive impact on firm social,
environmental and economic sustainability (Liao et al., 2015; Oba
and Fodio, 2012).
Some views, in contrast, conveyed that there is no explicit
impact of boardroom gender diversity on firm CSD (Al-Shaer and
Zaman, 2016; Galbreath, 2009). In comparison to the other direc-
torship, Adams and Ferreira (2009) argued that women directors
appear to have a similar impact as independent directors on CSD.
Some authors further argued that corporations can take advantage
by appointing more women on board while at the same time they
have obstacles of gender discrimination and stereotyping which
limit their ability to contribute towards the corporate strategy such
as CSD. Some others noted that female directors are good and soft
on issues such as corporate donations, occupational health, and
safety, human resource and ethics. They, however, lacking their
knowledge on hard and technical issues such as climate change,
carbon emission reductions and environmental management sys-
tems (EMS). Such issues are tended to associated with hard science,
technology and technical or engineering processes (Sharma and
Henriques, 2005).
To sum up, despite the tokenism and minority hypotheses of the
previous literature which reduce or neglect importance of women
directors on the board in a male-dominated corporate world
(Galbreath, 2016), this study, based on the stakeholder theory and
extant literature, assumes a significant positive relationship be-
tween women directors and CSD. Besides contradiction in previous
findings, the scarcity of prior empirical literature investigating the
relationship between women directors and CSD is also a motivation
for the current study. The motivation is further pronounced by
investigating the relationship in an emerging country like Malaysia
where the government is keen to increase and improve both the
representation of women on boards and CSD in public listed com-
panies. In pursuit of this inclination of the government, Malaysian
companies are striving hard to comply with government mission of
voluntary regulations including improvement in boardroom
gender diversity and CSD. However, their efforts are still in the
infancy stage and need much more focus. In view of this, there is a
need to investigate the role of women directors in improving CSD in
the Malaysian context. Hence, based on the stakeholders and
gender socialization theories, we hypothesized that.
Hypothesis 1. The representation of women directors on boards is
positively linked to corporate sustainability disclosures.
Hypothesis 2. The representation of women directors on boards
is positively linked to social sustainability.
Hypothesis 3. The representation of women directors on boards
is positively linked to environmental sustainability.
Hypothesis 4. The representation of women directors on boards
is positively linked to workplace sustainability.
Hypothesis 5. The representation of women directors on boards
is positively linked to economic sustainability.
Hypothesis 6. The representation of women directors on boards
pronounces corporate sustainability disclosures in the post context
of MCCG 2012.
2.5.2. Firms’ characteristics
Firms’ specific characteristics like age and size have the poten-
tial to affect the estimation of the desired relationship. Similarly,
external governance mechanisms such as the introduction or
revision of CG regulations and other reforms may also influence the
organizational structure and operational efficiency of firms.
 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683
Moreover, the nature of business or type of industry and time also
has obvious effects on the computation of a corporate issue.
Accordingly, all these are included as a control variable for ensuring
an accurate estimation of the model (Slater and Romi, 2013).
Further detail on these relationships is provided as follows.
2.5.3. Firms’ financial performance and CSD
Gender socialization theory further endorses that women are
more aware, concerned and caring for others’ needs and thus
sensitive to ethical issues (Ibrahim et al., 2009). Boards with
women directors are supposed to be less influenced by the CEO and
management. Also, the heterogeneity in gender at the top man-
agement reduces the intensity of agency conflict between man-
agement and shareholders (Rahman et al., 2017a). Moreover, the
heterogeneous boards also respond well to the complexities of the
environment by making effective non-routine and multifaceted
decisions (Hambrick and Mason, 1984). In addition, these boards
not only improve firms’ financial performance but also increases
their positive image in the product, labor and capital market (Kang
et al., 2010). By virtue of better understanding of the customers’
needs and market trends, they also improve firms’ capabilities of
innovation and creativity (Daily and Dalton, 2003). Likewise, they
improve firms’ early compliance with newly introduced CG regu-
lations and other reforms which improve their financial perfor-
mance. Many empirical studies validate this assumption by
documenting a significant positive relationship between women
directors and firms’ financial performance (Amoll, 2015; Galbreath,
2018).
2.5.4. Malaysian Code on corporate governance (MCCG) 2012, size
and independence of the board
Malaysia introduced the first CG code i.e. Malaysian Code on
Corporate Governance in March 2000. However, after some do-
mestic corporate fiascoes and international development, the code
was revised by introducing MCCG 2007 in 2007. The global financial
turmoil in 2007-08 and few gigantic corporate failures in 2008 and
2010 in Malaysia, once again necessitated the revision of the code.
Subsequently, the Securities Commission Malaysia introduced a
new code e MCCG 2012 in March 2012. Among others, the new
code focused on promoting corporate sustainability in listed com-
panies of the country. Also, the new code recommends improving
boardroom diversity, particularly that in gender on boards. In view
of this, the current study anticipates a significant positive impact of
the enactment of the code in improving the representation of
women directors on the boards and inculcating the practices of
corporate sustainability. Board size means the number of directors
on the board. There is no universal guiding principle regarding the
size of the board. However, on the basis of effective communication,
quick and unanimous decisions along with improving firms’
financial performance, an average size board composed of eight
members is recommended (Adams and Mehran, 2012). Despite the
problems in communication and coordination, larger boards are
preferred on account of diversity in gender, education, experience,
age, and background, among others. Boardroom diversity is
believed to improve CSD. The study explains that boards have the
primary duty of looking into the decisions and actions of managers
with faith, diligence, and care in the best interests of all stake-
holders (Abu-Tapanjeh, 2009). It is also argued that independent
directors or their proportion on the board matter in free, fair,
impartial and objective judgment as they afraid of damaging their
reputation and career by favoring an unethical, undesired, or un-
acceptable decision of the management (Fama and Jensen, 1983).
Authors found that independent directors contribute prestige,
expertise, contacts, wisdom, and strategic direction to the firms and
their inclination towards sustainability for improving firms’
5
direction and reputation in the eyes of customers and society (Zhu
et al., 2016). A study of 394 firms investigated the difference be-
tween the boards of the firms socially responsible and those which
are not. The findings revealed a higher number of independent
directors on the boards of socially responsible firms than others.
Nevertheless, in contrast, it is also assumed that independent di-
rectors lack firms and industry-specific knowledge due to their
part-time employment, low stakes at risk, and management’s un-
willingness to share information with them (Nicholson and Kiel,
2007).
2.5.5. Firm size and age
Firms’ size has extensively been employed as a control variable
in prior CSD related studies (Dissanayake et al., 2016). Previous
studies show a significant positive association of firms’ size with
CSD. It is found that large firms show good compliance with CSD
which implies that the bigger the size of the firm, the more it would
be inclined towards CSD (Rahman et al., 2011). A plausible expla-
nation for this relationship is that large firms are under the greater
scrutiny of stakeholders, including government, media, regulators,
the general public, employees and increased number of customers
(Tracey, 2014). Accordingly, an empirical study found that firms’ age
is one of the most important elements that affect CSD (Dissanayake
et al., 2016). Also, these studies found a significant positive rela-
tionship between firms’ age and CSD (Kansal et al., 2014). Some
authors noted that older firms disseminate substantial information
in the reports about their engagements in relation to CSD (Jo and
Harjoto, 2012).
3. Research methods
This study’s total population is composed of the Malaysian
public listed companies registered on Bursa Malaysia. As of 31
December 2011, a total of 957 public listed companies were regis-
tered in 11 different sectors on the main board of Bursa Malaysia. In
view of this, the sample of the study calculated through sample size
calculation formula: n ¼ N/1 þ Ne2 where: n ¼ sample size;
N ¼ total population size; e ¼ desired margin of error (the per-
centage of error allowed) (Raosoft, 2004). As the population was
957 listed companies, thus, the sample size should be 274 com-
panies per year. However, this study selects 301 companies as a
sample per year, which was larger than the minimum required
sample size (274 per year). The rationale behind selecting a larger
sample than the minimum required was to create a cushion against
missing values or outliers in the data. It is argued that outliers in
data may reduce the sample size of a study (Hair et al., 2006). In
view of this, it is advised to select an extra sample by 10 percent
(274 þ 27 ¼ 301 per year) than the minimum required (Hair et al.,
2006). Among others, the additional sample also assists the
Table 1
Total Sample Size Sector wise.
# Sectors No. of Company Reports
1 Consumer Products 173
2 Industrial Products 205
3 Construction 45
4 Trading Service 198
5 Finance 32
6 Infrastructure Projects 16
7 Hotels 12
8 Plantation 48
9 Mining 3
10 Technology 33
11 Properties and Real Estate 113
Total Sample Size 878
6 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683
generalization of the derived conclusions (Saunders et al., 2009).
Table 1 shows the sector-wise details of the total sample of the
study. The study applied stratified random sampling that is
preferred on account of providing an equal chance of selection to
each unit of the population. The sampling is favored due to an edge
over others in the generalization of the findings. After finalizing
sample, the study downloaded annual reports of the specified firms
from the website of Bursa Malaysia and employed the method of
content analysis for data collection from these reports. The method
is considered superior, and hence widely used, particularly in the
research related to CSD (Boesso and Kumar, 2007). In order to
control the subjectivity bias in data collection two persons (first
two authors of the paper) were involved and the rest were assigned
with tasks such as cross verification, audit and correct data coding.
Being hectic process and time consuming, the data were collected
in 13 months and thus stopped until 2013.
After collecting and entering data, the study examined and
addressed the issue of outliers using SPSS Explore command to
identify outliers and influential observations in the data. Total 25
outliers were found in the data and thus removed from the sample.
After the removal of outliers, the study applied Cook’s Distance to
test a further impact of outliers in the data. According to the results,
the maximum and minimum values of standard residuals did not
exceed the threshold value ± 3 (Hair et al., 2006). After removing
the outliers the final sample was reduced to 878 companies and
thus, all the computations and conclusions derived in the study
were based on that sample.
3.1. Measurement of variables
3.1.1. Corporate sustainability disclosures index and scoring method
The study adapted the index of corporate sustainability disclo-
sure developed by the authors (Zahid and Ghazali, 2015), for
measuring CSD. However, the current study separates the social
dimension of the subject index into social and workplace di-
mensions. The social dimension covers community or external CSD
of the company while the workplace dimension covers internal
practices for the employees’ wellbeing as recommended by the GRI
and Bursa Malaysia CSD four dimensions frameworks covering so-
cial, environmental, workplace and economic aspects of the subject.
After collecting data through this index, the study conducted a
reliability test by using Cronbach’s alpha score for all the items. The
test assesses the reliability/internal consistency of the disclosure
index. The value of Cronbach’s alpha of standardized items (43) is
0.9078 which falls in the acceptable range as noted by previous
authors (Anas et al., 2015). Moreover, there is no item excluded from
the index due to zero variance. Measurements of variables are based
on previous literature as explained in Table 2 below.
3.1.2. OLS assumptions and research models specifications
Ordinary Least Squares (OLS) regression estimator which is a
standard linear regression and employed by a number of re-
searchers in the past, used for the computations of all research
models in the study (Eccles et al., 2013). Before testing and
explaining casual relationships among predictors and outcome
variables, this study investigated the homogeneity or hetero-
scedasticity of variance. The study employed the Breusch-Pagan/
CookeWeisberg test the p-value (Prob > chi2 ¼ 0.000) which sug-
gests heteroscedasticity or no homogeneity of variance. This is fixed
by employing a robust option after running the multiple regression
estimation. For the sake of normality and interpretability of the
constant and slope coefficients in the OLS models, all the concern
variables of the study were mean centered as reported by the
Skewness and Kurtosis in Table 3. The Ovtest of Stata was applied;
the results confirmed that there was no omitted variable bias
existed in all the models of the study and thus fit for running the
OLS regression (Hair et al., 2006). Additionally, the study also
included lag of CSD and other firms’ characteristics as control var-
iables in order to avoid potential omitted variables bias, if any. The
models estimated through STATA 13.0. Equation (1) explains the
causal hypotheses of the study in econometric form as follows:
git ¼ a1 þ b1it þ cit þ dt þ hi þ εit Equation 1
Where g is dependent variable using CSD, social, environmental,
economic and workplace in corresponding regression models, i
represents firm and t year while a1 is constant. Likewise, b1it rep-
resents independent variables such as gender diversity (dummy
and proportion) while cit used for control variables such as firm
age, firm size, lag of dependent variable, board size, and board in-
dependence. Year and industry dummies are denoted by dt and hi
respectively while εit represents error term in the equation.
4. Results and discussion
Table 3 reports descriptive statistics for CSD and its different
dimensions - social, economic, environmental, and workplace. The
findings also account for EBITDA, firms’ age, size, board size, board
independence and gender diversity variables of the sample firms. In
addition, Table 3 also reports the frequency for boardroom gender
diversity and MCCG 2012. The total score of CSD ranges from 6.00 as
a minimum to 43.00 as maximum with a mean value of 20.16. Mean
value for the CSD score is almost similar to the previous authors
(Katmon et al., 2017; Zahid and Ghazali, 2015) whereas, higher than
(Adnan, 2011). The mean value of firm size for three years is 5.830.
The maximum total assets (using a lag of total assets) of firms were
8.480 (2011), 8.530 (2012), and 8.280 (2013), whereas the mini-
mum value of total assets was 4.440 (2011), 4.480 (2012), and 4.530
(2013). These results are higher than the previous studies of (Lee
et al., 2013) and less than the findings of Sulaiman et al. (2014).
The average age of sample firms is 16 in a range from a minimum of
1 year minimum to 41 years maximum (2013). This implies that a
stratified random sampling of the study accounted for both the new
as well as already established firms. Firms’ size has a mean value of
5.83 in a range with a minimum value of 3.54 and a maximum of
8.12. The financial performance of sample firms measured by
EBITDA shows a mean value of 4.51 which is higher than Anas et al.
(2015) Boesso et al. (2013) but lower than Fazli et al. (2013). Average
board size is 7.14 with a minimum of 4 directors and a maximum of
12 directors which is consistent with Katmon et al. (2017) in
Malaysia. With respect to board independence, the mean value of
0.47 is also in line with Katmon et al. (2017). The mean value of
boardroom gender diversity is 0.09 which is slightly higher than
Katmon et al. (2017). The difference in findings might be due to
sample size or period of the study.
Table 3 also reports normality of the variables. Normality of all
continuous variables investigated through Skewness and Kurtosis
the values of which fall in a range between ±1.96 at an alpha of 0.05
and thus there is no issue of non-normality. According to Hair et al.
(2006), variables are normal if their skewness and kurtosis range
between ±1.96 at an alpha of 0.05 and ± 2.58 at a significance of
0.10.
4.1. Pearson’s and Spearman’s correlation matrix
The study employed both Pearson’s and Spearman’s correlation
matrix to investigate multicollinearity among the predictors.
(Tabachnick, 2007) reported that if the correlation between the two
predictors is higher than 0.90, it evidences the problem of multi-
collinearity. The statistics reported in Table 4 show that the high
 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683 7

Table 2
Summary of variable measurements.

S# Variables Description

1 CS Disclosures Composite Scoring Method CSD ¼ Sdi

(This Method is also Applied for the Individual Dimensions of CSD i.e. Where, d ¼ 1 if the CS practices item is disclosed; d ¼ 0 if the CS practices item is not
Social, Environmental, Workplace, and Economic Sustainability) disclosed; i represents year(s). The highest score of the content will be implied as high
performance.
The same formula was applied to calculate the total score for each dimension of CSD i.e.
Social, Environmental, Workplace, and Economic Sustainability
(Ameer and Othman, 2011; Klettner et al., 2014; Searcy and Buslovich, 2014)
2 Boardroom Gender Diversity 1. Using dichotomous variable coding for gender diversity denoting 1 for the female director
on the board and 0 for none (Campbell and Mínguez-Vera, 2007; Singh et al., 2001)
2. Using a percentage of female directors on the board (Katmon et al., 2017)
3 MCCG 2012 0 for 2011 before and 1 for 2013 after the enactment of the MCCG 2012 (Madi, 2012)
4 Firm Size Log of the companies’ total assets (Amran and Devi, 2008; Kansal et al., 2014)
5 Firm Age The Time duration in years since its incorporation till the time of observations (Dissanayake
et al., 2016; Kansal et al., 2014; Tracey, 2014)
6 Firms’ Financial Performance EBITDA ¼ Earnings before interest, taxes, depreciation and amortization (Ameer and
Othman, 2011; Gramlich and Finster, 2013; Orlitzky, 2008)
7 The lag of Dependent Variables The lag of the dependent variable representing each hypothesis/model (Horva thova, 2012;
Singal, 2013; Zu and Song, 2008)
8 Board Size Board size measured using the number of directors
9 Board Independence Independent board of directors measured using the ratio of independent directors to total
directors
10 Industry Type and Year Industry and year as dummy variables representing the industry sector and year (Amran and
Haniffa, 2011; Dissanayake et al., 2016; Lys et al., 2015)

Data sources: Data for CSD and boardroom diversity were extracted from company annual reports. Whereas, for financial data, a Datastream a financial database was used.

Table 3
Summary of variable measurements.

N Min Max Mean S.D Skewness Kurtosis

Statistic Statistic Statistic Statistic Statistic Statistic S.E Statistic S.E

CSD 878 6.00 43.00 20.16 6.83 0.98 0.08 1.05 0.16
Social 878 0.00 10.00 4.38 1.95 0.28 0.08 0.17 0.16
Economic 878 5.00 13.00 7.62 1.50 1.11 0.08 1.35 0.16
Environmental 878 0.00 12.00 4.42 2.86 0.48 0.08 0.45 0.16
Workplace 878 0.00 12.00 3.75 1.97 1.11 0.08 2.05 0.16
Firm’s Age 878 1.00 41.00 15.97 8.03 0.14 0.08 0.65 0.16
EBITDA 878 0.30 8.96 4.51 1.54 0.03 0.08 0.11 0.16
Firm’s Size 878 3.54 8.12 5.83 0.75 0.01 0.08 0.10 0.16
Lag of CS 878 6.00 43.00 20.16 6.83 0.97 0.08 1.04 0.16
Board Size 878 4.00 12.00 7.14 1.580 0.501 0.08 0.023 0.16
Board Independence 878 0.00 1 0.47 0.123 0.782 0.08 0.209 0.16
Women Proportion 878 0.00 1 0.09 0.113 1.154 0.08 0.649 0.16
Frequencies Yes No %Yes %No Cum.% -Yes/No
Boardroom Diversity 878 0 1 347 531 39.50 60.50 39.50 100.00
MCCG 2012 878 0 1 583 295 33.60 64.40 33.60 100.00

Table 4
Pearson’s and Spearman’s correlations matrix.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)

CSD (1)rowhead 1 .757** .878** .833** .811** .435** -.102** .176** .498** .319** .614** 0.002 0.045 0.022
Social (2)rowhead .757** 1 .513** .513** .503** .297** -.098** .128** .474** .316** .435** 0.010 0.011 0.027
Environmental (3)rowhead .878** .513** 1 .613** .626** .302** -.088** .147** .376** .231** .530** 0.020 0.066 0.037
Workplace (4)rowhead .833** .513** .613** 1 .650** .546** 0.062 .129** .421** .255** .531** 0.001 0.044 0.010
Economic (5)rowhead .811** .503** .626** .650** 1 .304** -.090** .187** .388** .270** .527** 0.039 0.007 0.010
Boardroom Diversity (6)rowhead .435** .297** .302** .546** .304** 1 0.028 0.010 .275** .160** .255** 0.045 0.010 0.006
MCCG (7)rowhead -.102** -.098** -.088** 0.062 -.090** 0.028 1 0.061 0.036 0.018 0.013 0.026 0.020 0.023
Firm’s Age (8)rowhead .176** .128** .147** .129** .187** 0.010 0.061 1 .163** .189** .149** 0.013 0.055 0.032
EBITDA (9)rowhead .498** .474** .376** .421** .388** .275** 0.036 .163** 1 .535** .359** 0.031 0.015 0.027
Firms’ Size (10)rowhead .319** .316** .231** .255** .270** .160** 0.018 .189** .535** 1 .198** 0.010 0.032 0.049
Lag of CS (11)rowhead .614** .435** .530** .531** .527** .255** 0.013 .149** .359** .198** 1 0.012 0.020 0.005
Board Size (12)rowhead 0.002 0.010 0.020 0.001 0.039 0.045 0.026 0.013 0.031 0.010 0.012 1 -.377** 0.012
Board Independence (13)rowhead 0.045 0.011 0.066 0.044 0.007 0.010 0.020 0.055 0.015 0.032 0.020 -.377** 1 0.063
Women Proportion (14)rowhead 0.022 0.027 0.037 0.010 0.010 0.006 0.023 0.032 0.027 0.049 0.005 0.012 0.063 1

**, * Correlation is significant at the 0.01 level (2-tailed), and 0.05 levels (2-tailed) respectively.

correlations between predictors are equal or lower than 0.877; thus investigate multicollinearity. The findings for VIF as reported in
there is no multicollinearity (Hair et al., 2006). Additionally, the Table 5 show that all values are below the threshold of <3, and
study also employed the Variance Inflation Factor (VIF) to hence there is no multicollinearity (Gujarati and Porter, 2004).
8 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683

4.2. Hypotheses results
The statistics reported in Table 7 explain a significant positive
impact of boardroom diversity on the CSD and its dimensions.
Moreover, the statistics also show that boardroom gender diversity
has a significant positive association with each dimension of CSD -
environmental, workplace, social, and economics separately.
Table 6 (t-test) further endorses these statistics by explaining that
firms with women on board are good than others in regard to the
CSD. The robust analyses using gender diversity as a proportion (see
Table 7) also confirm the above stance. Simply, the findings endorse
the notion that women are more conscious about the environment,
economics, workplace, philanthropy and social welfare of the
public and employees. In addition, it is also found that the re-
lationships pronounced after enactment of the MCCG 2012 by
comparing the pre and post contexts of the code (see Tables 8 and 9
respectively). Overall, the findings support hypotheses H1 to H6 of
the study. These findings are also consistent with previous litera-
ture showing that women as compared to men are more responsive
to CSD (Nadeem et al., 2017). The findings also endorse the
postulations of the stakeholder and gender socialization theories in
that heterogeneity at the top i.e. women directors better serve all
the stakeholders by improving the quality of boardroom decisions
(Chams and García-Blando  n, 2019).
4.3. Discussion on control variables
The results reported in Tables 6 and 7 are interesting as the
introduction of MCCG 2012 has negatively impacted CSD and its
related dimensions. Except for workplace, the adverse effect of the
code is further endorsed by its significant negative impact on all
other dimensions of CSD such as environmental, social and eco-
nomic sustainability separately. The findings have a plausible
explanation that the introduction of corporate reforms increases
firms’ compliance costs which affect their profitability particularly
in the short run (Tariq and Abbas, 2013). This, in turn, affects firms’
efforts in that to ensure costly or high budgeted sustainability
practices. However, the results did not report a statistically signif-
icant (positive) association between MCCG 2012 and workplace
sustainability practices. It might be due to the belief of the

Table 5
Ordinary Least Squares (OLS) regression results using dummy coding of gender diversity.

Model1 (CSD) Model2 (Environmental) Model3 (Workplace) Model4 (Social) Model5 (Economic)

Gender Diversity (Dummy) 3.566*** 0.572*** 0.769*** 0.502*** 1.723***

(0.371) (0.125) (0.176) (0.088) (0.101)
MCCG 2012 1.149*** 0.326*** 0.428*** 0.234*** 0.161
(0.315) (0.110) (0.153) (0.082) (0.099)
Firms’ Age 0.035 0.011 0.009 0.010* 0.005
(0.023) (0.007) (0.010) (0.006) (0.007)
Firms’ Size 0.067** 0.027*** 0.036*** 0.008 0.003
(0.027) (0.010) (0.013) (0.007) (0.009)
EBITDA 1.112*** 0.379*** 0.380*** 0.130*** 0.222***
(0.147) (0.047) (0.067) (0.037) (0.048)
Lag of CS 0.384*** 0.081*** 0.151*** 0.071*** 0.081***
(0.040) (0.011) (0.017) (0.008) (0.011)
Board Size 0.002 0.016 0.012 0.031 0.001
(0.103) (0.035) (0.052) (0.026) (0.030)
Board Independence 0.943 0.157 0.933 0.142 0.309
(1.498) (0.495) (0.678) (0.381) (0.427)
Years Combine Effect 0.852* 0.178 0.237 0.206 0.232
(0.507) (0.170) (0.244) (0.126) (0.150)
Consumer Products 0.965 0.126 0.872*** 0.036 0.070
(0.696) (0.222) (0.294) (0.156) (0.208)
Trading 0.230 0.596*** 0.056 0.067 0.377*
(0.663) (0.210) (0.282) (0.148) (0.199)
Industrial Products 0.374 0.118 0.586** 0.081 0.412**
(0.641) (0.207) (0.272) (0.150) (0.188)
Plantation 3.427*** 0.483 1.908*** 1.410*** 0.592**
(1.001) (0.294) (0.379) (0.269) (0.284)
Hotels 3.868* 0.306 1.832* 0.119 1.611**
(2.123) (0.416) (0.992) (0.281) (0.654)
Infrastructure 0.492 0.427 0.857 0.810 0.966
(2.426) (0.537) (1.001) (0.543) (0.618)
Technology 0.295 0.757*** 0.833* 0.173 0.046
(0.809) (0.253) (0.440) (0.193) (0.218)
Finance 1.944* 0.549* 1.995*** 0.457* 0.143
(1.152) (0.298) (0.590) (0.233) (0.340)
Construction 0.530 0.452* 0.527 0.203 0.252
(0.748) (0.268) (0.371) (0.173) (0.227)
Mining 0.866 1.280* 2.927*** 4.683*** 0.389
(2.069) (0.680) (1.017) (0.535) (0.631)
Property and Real Estate 0.022 0.241 0.057 0.289 0.127
(0.746) (0.237) (0.405) (0.177) (0.214)
Constant 0.866 1.280* 2.927*** 4.683*** 0.389
(2.069) (0.680) (1.017) (0.535) (0.631)
R-Square 0.542 0.372 0.404 0.389 0.508
RMSE 4.69 2.237 1.404 1.564 1.186
VIF 1.41 1.41 1.41 1.41 1.41
Robust Yes Yes Yes Yes Yes

Standard errors are in parenthesis.

***p < 0.01, **p < 0.05, *p < 0.1.
 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683 9

Table 6
T-test results.

Levene’s Test for t-test for Equality of Means

Equality of
Variances

F Sig. T Df Sig. Mean Difference Std. Error Difference 95% Confidence

Interval of the
Difference

Lower Upper

CSD Equal variances assumed 57.443 0.000 14.114 876 .000 6.008 .4257 5.179 6.844
Equal variances not assumed 15.380 875.9 .000 6.008 .3907 5.242 6.775

Table 7
Ordinary Least Squares (OLS) regression results using proportion of gender diversity.

Model1 (CSD) Model2 (Environmental) Model3 (Workplace) Model4 (Social) Model5 (Economic)

Gender Diversity (Proportion) 2.689** 1.325** 0.773* 0.872* 0.318**

(1.343) (0.647) (0.429) (0.469) (0.153)
MCCG 2012 1.215*** 0.438*** 0.198* 0.334*** 0.244***
(0.327) (0.154) (0.111) (0.111) (0.083)
Firms’ Age 0.026 0.007 0.001 0.010 0.008
(0.024) (0.010) (0.008) (0.007) (0.006)
Firms’ Size 0.089*** 0.041*** 0.006 0.031*** 0.011
(0.027) (0.013) (0.010) (0.010) (0.007)
EBITDA 1.376*** 0.438*** 0.349*** 0.422*** 0.167***
(0.158) (0.068) (0.055) (0.047) (0.037)
Lag of CS 0.432*** 0.162*** 0.105*** 0.088*** 0.078***
(0.041) (0.016) (0.012) (0.011) (0.008)
Board Size 0.050 0.003 0.024 0.009 0.038
(0.108) (0.053) (0.035) (0.035) (0.026)
Board Independence 1.311 0.967 0.548 0.124 0.081
(1.599) (0.688) (0.519) (0.499) (0.388)
Years Combine Effect 0.575 0.174 0.103 0.131 0.168
(0.532) (0.247) (0.170) (0.171) (0.128)
Consumer Products 1.400* 0.973*** 0.131 0.200 0.096
(0.757) (0.303) (0.241) (0.228) (0.161)
Trading 0.111 0.085 0.431* 0.576*** 0.051
(0.727) (0.289) (0.234) (0.217) (0.156)
Industrial Products 0.741 0.659** 0.225 0.173 0.135
(0.699) (0.278) (0.220) (0.215) (0.156)
Plantation 3.161*** 1.841*** 0.476 0.532* 1.375***
(1.064) (0.392) (0.325) (0.296) (0.275)
Hotels 3.339 1.743* 1.322* 0.235 0.040
(2.332) (1.038) (0.706) (0.458) (0.312)
Infrastructure 1.240 1.226 0.123 0.703 0.565
(2.739) (1.048) (0.784) (0.579) (0.582)
Technology 1.834** 1.173*** 0.778*** 0.505* 0.388**
(0.849) (0.432) (0.248) (0.264) (0.195)
Finance 1.869 1.980*** 0.180 0.537* 0.468*
(1.213) (0.609) (0.364) (0.290) (0.245)
Construction 0.057 0.408 0.041 0.542** 0.118
(0.781) (0.370) (0.256) (0.269) (0.177)
Mining 13.005*** 3.885** 3.610*** 4.189*** 1.321*
(4.042) (1.511) (1.021) (0.818) (0.732)
Property and Real Estate 0.316 0.043 0.219 0.309 0.255
(0.720) (0.393) (0.237) (0.233) (0.176)
Constant 0.144 3.203*** 0.205 1.466** 4.608***
(2.098) (1.016) (0.697) (0.671) (0.536)
Obs. 878 878 878 878 878
R-squared 0.490 0.392 0.358 0.358 0.367

Standard errors are in parenthesis.

***p < 0.01, **p < 0.05, *p < 0.1.

Malaysian public listed companies that social external contribu-
tions are enough to complete their responsibilities towards sus-
tainability and hence, they ignored other dimensions particularly
workplace sustainability. Moreover, it may also be due to the new
code as it was not fully inferencing the results from the methodo-
logical perspectives and limited time period of the study. The re-
sults also show that firms’ size has a significant (positive or
negative) effect on overall CSD as a combined construct. The find-
ings show that firms’ size has a significant positive impact on the
environmental and social dimensions of corporate sustainability.
These findings are consistent with the suppositions of stakeholder
theory as large firms are highly focused by the public, media and
regulators and thus they are serious in ensuring corporate activities
in a manner appreciable or at least acceptable to all stakeholders
particularly society (Chams and García-Blando  n, 2019). Firms’ size
has a negative impact on workplace sustainability which implies
that large firms may not take due care of workplace practices or
these firms face more accidents (Dissanayake et al., 2016). The
10 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683

Table 8
Ordinary least squares (OLS) regression results in pre-context of MCCG 2012

Model1 (CSD) Model2 (Environmental) Model3 (Workplace) Model4 (Social) Model5 (Economic)

Gender Diversity (Dummy) 1.530** 0.035 1.284*** 0.159 0.052

(0.517) (0.269) (0.190) (0.201) (0.150)
Firms’ Size 0.004 0.013 0.006 0.011 0.001
(0.034) (0.018) (0.013) (0.013) (0.010)
Firms’ Age 0.007 0.014 0.002 0.003 0.006
(0.030) (0.016) (0.011) (0.012) (0.009)
EBITDA 0.869*** 0.272** 0.152** 0.367*** 0.077
(0.182) (0.095) (0.067) (0.071) (0.053)
Lag of CS 0.727*** 0.280*** 0.158*** 0.152*** 0.137***
(0.040) (0.021) (0.015) (0.015) (0.011)
Board Size 0.068 0.057 0.013 0.118* 0.006
(0.155) (0.081) (0.057) (0.060) (0.045)
Board Independence 1.256 0.418 0.269 0.119 0.449
(2.012) (1.045) (0.740) (0.783) (0.584)
Year Combine Effect 0.358 0.431 0.162 0.095 0.140
(0.714) (0.371) (0.263) (0.278) (0.207)
Consumer Products 0.705 1.036** 0.181 0.328 0.178
(0.807) (0.419) (0.297) (0.314) (0.234)
Trading 0.014 0.025 0.439 0.243 0.185
(0.763) (0.397) (0.281) (0.297) (0.221)
Industrial Products 0.206 0.500 0.609** 0.211 0.114
(0.781) (0.406) (0.287) (0.304) (0.227)
Plantation 0.709 1.080* 0.188 1.113** 0.930**
(1.183) (0.614) (0.435) (0.461) (0.343)
Hotel 3.501* 2.125** 1.458** 0.007 0.075
(2.002) (1.040) (0.736) (0.780) (0.581)
Infrastructure 1.939 0.421 1.384* 0.035 0.941*
(1.811) (0.941) (0.666) (0.705) (0.525)
Real Estate and Properties 0.037 0.382 0.372 0.279 0.327
(1.002) (0.520) (0.368) (0.390) (0.291)
Technology 0.945 0.361 0.122 1.299** 0.115
(1.382) (0.718) (0.508) (0.538) (0.401)
Finance 2.835** 1.788** 0.288 0.835 0.075
(1.348) (0.700) (0.496) (0.525) (0.391)
Construction 2.077* 1.006* 0.498 0.085 0.488
(1.139) (0.592) (0.419) (0.443) (0.330)
Mining 3.769 0.455 1.154 2.552* 0.392
(3.823) (1.986) (1.406) (1.489) (1.109)
Constant 1.031 2.399 0.240 0.373 4.043***
(2.952) (1.533) (1.085) (1.149) (0.856)
N 878 878 878 878 877
R-Square 0.749 0.592 0.608 0.524 0.540
RMSE 3.714 1.929 1.366 1.446 1.078
Robust Yes Yes Yes Yes Yes

Standard errors are in parenthesis.

***p < 0.01, **p < 0.05, *p < 0.1.

estimations reported from Tables 5e9 provide evidence that board
independence and board size have no significant impact on the
overall analysis. These results are not surprising as these are in line
with Katmon et al. (2017) in the context of Malaysia.
Last but not least, the findings showed a significant positive
association of boardroom gender diversity with firms’ financial
performance gauged by accounting measure EBITDA. The EBITDA is
considered as less subjective to the managers’ discretionary pol-
icies and choices regarding surplus resources than many other
accounting-based measures such as return on assets (ROA) (Boesso
et al., 2013; Orlitzky et al., 2003). Overall, the findings are consistent
with the suppositions of stakeholder and gender socialization
theories which assume that women directors improve the level of
satisfaction of multiple stakeholders by improving firms’ perfor-
mance through reducing agency conflict (Boesso et al., 2013). The
findings are alike to Hassan and Marimuthu (2018) who a signifi-
cant positive relationship between boardroom diversity and firms’
financial performance in Malaysia. However, the findings are
inconsistent Abdullah and Ismail (2013) that women directors have
a significant/insignificant negative relation with firms’ financial
performance. Referring to the subsampling after controlling the
specific industry effects, the impact of both the proxies for gender
diversity (dummy and proportion) on CSD and its dimensions is
mixed. For instance, the relationships are significant positive in
industries like consumer products, plantation, hotel and technol-
ogy but negative in the finance and mining.
5. Conclusion and recommendations
This study aimed to investigate the impact of boardroom gender
diversity and some firms’ specific characteristics such as firms’ size,
age, board independence, board size, regulatory reforms i.e. MCCG
2012 and financial performance on CSD of the Malaysian listed
companies. The findings indicated that there is a significant role in
boardroom gender diversity in improving CSD. This is consistent
with the postulations of stakeholder and gender socialization the-
ories which assume a significant positive role of women directors in
improving CSD. As the overall level of CSD is yet to improve in
Malaysia (Zahid and Ghazali, 2015), hence, increase in the repre-
sentation of women on the board would have positive prospects for
CSD in the country. However, it is interesting that the MCCG 2012
that requires an increase in boardroom gender diversity has a
negative impact on CSD and its dimensions (social, environmental,
workplace and economic). The unexpected findings explain that
 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683 11

Table 9
Ordinary least squares (OLS) regression results in post-context of MCCG 2012

Model1 (CSD) Model2 (Environmental) Model3 (Workplace) Model4 (Social) Model5 (Economic)

Gender Diversity (Dummy) 3.983*** 0.964*** 1.821*** 0.584*** 0.614***

(0.456) (0.214) (0.129) (0.146) (0.112)
Firms’ Size 0.138** 0.055** 0.001 0.069*** 0.015
(0.041) (0.020) (0.012) (0.014) (0.010)
Firms’ Age 0.046 0.018 0.007 0.011 0.009
(0.029) (0.013) (0.008) (0.009) (0.007)
EBITDA 0.841*** 0.303** 0.210*** 0.232*** 0.097**
(0.202) (0.089) (0.054) (0.061) (0.047)
Lag of CS 0.255*** 0.103*** 0.053*** 0.053*** 0.046***
(0.044) (0.015) (0.009) (0.011) (0.008)
Board Size 0.081 0.027 0.013 0.041 0.054
(0.131) (0.065) (0.039) (0.045) (0.034)
Board Independence 2.768 1.808** 0.762 0.020 0.178
(1.854) (0.845) (0.511) (0.578) (0.443)
Year Combine Effect 1.061* 0.487 0.326* 0.101 0.147
(0.620) (0.304) (0.184) (0.208) (0.159)
Consumer Products 1.100 0.779** 0.032 0.405* 0.052
(0.841) (0.358) (0.217) (0.245) (0.187)
Trading 0.346 0.089 0.335 0.784** 0.013
(0.821) (0.341) (0.206) (0.233) (0.178)
Industrial Products 0.850 0.695** 0.295 0.379 0.071
(0.780) (0.351) (0.213) (0.240) (0.184)
Plantation 5.040*** 2.390*** 1.027** 0.056 1.679***
(1.305) (0.522) (0.316) (0.357) (0.273)
Hotel 3.476 1.435 1.547** 0.373 0.121
(2.890) (0.871) (0.527) (0.596) (0.456)
Infrastructure 1.103 0.543 1.032** 0.347 0.960**
(3.031) (0.767) (0.464) (0.525) (0.402)
Real Estate and Properties 0.375 0.525 0.319 0.156 0.325
(0.911) (0.458) (0.277) (0.313) (0.240)
Technology 1.115 1.070* 0.136 0.301 0.209
(0.963) (0.583) (0.353) (0.399) (0.305)
Finance 1.538 2.196*** 0.366 0.361 0.652**
(1.378) (0.596) (0.361) (0.408) (0.312)
Construction 0.255 0.334 0.147 0.802** 0.067
(0.905) (0.512) (0.310) (0.351) (0.268)
Mining 11.586*** 3.722** 2.937** 3.690** 1.237
(3.154) (1.663) (1.007) (1.138) (0.871)
Constant 0.160 3.413** 0.789 2.512** 4.976***
(2.641) (1.289) (0.781) (0.883) (0.676)
N 878 878 878 878 877
R-Square 0.4848 0.3583 0.4856 0.340 0.354
RMSE 4.8473 2.2953 1.39 1.571 1.203
Robust Yes Yes Yes Yes Yes

Standard errors are in parenthesis.

***p < 0.01, **p < 0.05, *p < 0.1.

Malaysian firms follow or comply with the minimum requirements
of the soft or other regulations until specifically stated or manda-
tory (Rahman et al., 2017a). These companies do the minimum
possible to show compliance or avoid pressure and attention of the
public, media, and society. In view of these, it is inferred that
Malaysian companies did not pay much attention to the voluntary
recommendations of the MCCG 2012 in regard to increasing
boardroom gender diversity and CSD. Based on these, it is recom-
mended that any revision of CG code in the future must categori-
cally recommend the increase or improvement in boardroom
gender diversity and CSD. Another plausible and logical explana-
tion for the findings could be that sample firms have improved
compliance with other recommendations of the code instead of
CSD and thus enactment of the code affected CSD by increasing
firms’ compliance costs or decreasing their profitability. Besides,
the findings also unveiled that large and old firms are not only good
in adopting CSD but also professional in their reporting. This sug-
gests that Malaysian firms improve their approach towards CSD
with the passage of time, gaining experience and expansion in their
business. This, in turn, may possibly attract foreign investment and
assist the adoption of international standards for CSD, influence
global reporting guidelines (GRI) and legitimacy for firms’
operations in Malaysia. Therefore, it is recommended that small,
medium and new firms should improve their CSD and related
strategies. Apart from these, the findings revealed that boardroom
gender diversity has a significant positive impact on firms’ financial
performance. It suggests that besides improving CSD, women di-
rectors on the board also pronounce firms’ financial performance
that augments firms’ corporate sustainability by satisfying the de-
mands of multiple stakeholders.
This study has several contributions. For instance, the study fills
a research gap by investigating the impact of boardroom gender
diversity on CSD and its dimensions (social, environmental, work-
place and economic). The contribution is further pronounced by
carrying out the investigation in the context of a developing
country like Malaysia as most of the prior sustainability-related
studies mainly focused on the developed countries. The study
also contributes to the limited literature that mostly focused on
investigating the impact of corporate governance on firm perfor-
mance in pre and post context of MCCG 2012. In short, the study
enriches the extant previous literature by exploring the business
case of women directors particularly in improving CSD.
12 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683
5.1. Theoretical significance
This study tested the postulations of stakeholder and gender
socialization theories in an emerging economy like Malaysia, where
the focus of corporations is on shareholders instead of stake-
holders. The study supports that organizations while operating in
the society are responsible for the welfare of the stakeholders. To
achieve this, the postulations of the gender socialization theory,
support that women are more responsible than men to manage the
stakes of the broader stakeholders. In addition to Malaysia, the
findings of the study could also be fruitful in that to contribute
valuable insights for further improvement of the policy and prac-
tice in the countries such as Norway, Belgium, France, Germany,
and Pakistan, where laws/regulations implemented to earmark
quotas for increasing the representation of women directors with
an aim to improve firms’ level of compliance to good corporate
practices i.e. CG and CSD.
5.2. Practical significance
This study adapted the CSD index that is based on the GRI
reporting framework as Bursa Malaysia recommended it for
reporting and measuring CSD in the country. The index covers four
dimensions of CSD as recommended by the Bursa Malaysia (see
Appendix 1) which help public listed companies in ensuring and
reporting their CSD. The study also provides practical insights to the
public listed companies, regulators and practitioners regarding the
increase in the representation of women directors on the board
along with the uplifting of the level of compliance to economic,
environmental and social sustainability disclosures through effi-
cient participation of women directors on the board. These, in turn,
are expected to contribute towards the current developmental
plans of (2016e2020), and to the post (2020) developmental planes
of Malaysia as the government, under the New Economic Policy
(NEP), is committed to ensure the implementation of sustainability
practices through its 2020 Vision. Thus, the findings of the study
not only update the concern authorities such as Bursa Malaysia and
Dimensions of Definition
Corporate
Sustainability
Economic The organization’s impacts on the economic conditions of its
Sustainabilityb stakeholders, and on economic systems at local, national, and
global levels. The economic category illustrates the flow of
capital among different stakeholders and the main economic
impacts of the organization throughout society. (GRI, 2013)
Social Sustainabilityb The social dimension of sustainability concerns the impacts the
organization has on the social systems within which it operates.
(GRI, 2013)
Workplace Bursa Malaysia defined that “we draw our employees from
Sustainabilityb society and so everything we do with our staff needs to be
socially responsible, whether we are dealing with basic human
rights or gender issues. Good working environment and health
and safety are obvious considerations, as is the way in which, if
we believe in corporate social responsibility (CSR) [i.e.
Corporate Sustainability]”. (GRI, 2013)
Environmental The environmental dimension of sustainability concerns the
Sustainabilityb organization’s impact on living and non-living natural systems,
including land, air, water, and ecosystems. (GRI, 2013)
Source: Authors
a
Note: Bursa Malaysia divided social sustainability into two categories, internal (workplace-related issues) and external (community engagement).
b
Note: Definition of the individual focusing area is available in the Global Reporting Initiatives Framework (GRI, 2013).
security commission Malaysia but also provide implications for the
government of Malaysia to improve the representation of women
directors and CSD for ensuring sustainable industrialization and
cleaner production in the country. The findings of the study could
also have practical significance for other countries such as Norway,
Belgium, France, Germany, and Pakistan, which implemented laws/
regulations and earmarked quotas to increase the representation of
women directors as well CSD at corporate level.
6. Limitation and way forward
This study has certain limitations. First, the current study explored
only the gender aspect of boardroom diversity and not others in
relation to CSD. Second, the study adopted a purely quantitative
approach. In view of these, studies in the future may consider other
aspects of boardroom diversity and a qualitative approach. Third, due
to time and labor constraints, the study only focused on the data for
three years from 2011 to 2013. Therefore, studies may also extend the
time period of the study for capturing more comprehensive insights
on the subject in the future. Fourth, as a way forward the upcoming
studies may also consider the moderation and mediation variables
such as integrated strategies, board other characteristics, and finan-
cial performance variables. Finally, future studies should also
consider the recommendations of the latest i.e. the fourth Malaysian
Code on Corporate Governance, introduced in 2017.
Declaration of competing interestCOI
The authors declare that they have no known competing
financial interests or personal relationships that could have
appeared to influence the work reported in this paper.
Appendix 1. Dimensions of Corporate Sustainability
Disclosures
Key Stakeholders Focusing Areasa
Corporate Governance Practices, Reporting of Performance, Market presence
(Min Wages), Locals in Management, Indirect Economic Impact, Direct
Economic Impact, R&D Activities, Procurement Activities, Internal Control
Mechanism, Anti-corruption and whistle Blowing, Ethical Standards, Product
Responsibility, Economic Sustainability Awards
External (Community)
Community Engagement through Philanthropy, Product Responsibility,
Customer Satisfaction, Products and Services Labeling (Eco-Labelling),
Education Facilities (Training and Internships), Cultural, Heritage and
Celebration of Special Occasion, Sports and Other Activities, Shelters Facilities,
Donations, Social Sustainability Related Awards
Internal (Workplace)
Decent Labor Practices, Employment Opportunities, Occupational Health and
Safety, Employee’s development, training and education, Diversity and Equal
Opportunities, Supplier Assessment regarding Labor Practices, Assurance of
Human Rights, The Labor Union and Bargaining Power, Prevent Child Labor,
Drinking water on the workplace, Employees Satisfaction Survey, Workplace
Sustainability Awards
Environmental Management System (EMS) and Certifications, Material Used
and Produced, Material Recycled, Energy Consumption and Reduction, Water
Consumption, Biodiversity, Emissions including Greenhouse Gases (GHG),
Effluents and Waste Reductions, Product Environmental Impacts,
Transportation Impacts, Suppliers’ Environmental Impacts, Environmental
Related Awards
 M. Zahid et al. / Journal of Cleaner Production 244 (2020) 118683 13

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