The Relationship between Board Diversity, Board Independence and Corporate Fraud

Authors

  • Nazhatul Afzan Abdul Halim Faculty of Accountancy, University Teknologi MARA Selangor, Malaysia
  • Norhayati Alias Faculty of Accountancy, University Teknologi MARA Selangor, Malaysia
  • Noor Hasniza Haron Faculty of Accountancy, University Teknologi MARA Selangor, Malaysia

Keywords:

Corporate governance, corporate fraud, board diversity, board independence, theoretical perspective

Abstract

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.

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Published

16-12-2024

How to Cite

Abdul Halim, N. A. ., Alias, N. ., & Haron, N. H. . (2024). The Relationship between Board Diversity, Board Independence and Corporate Fraud . Advances in Business Research International Journal, 7(1), 33–55. Retrieved from https://journal.uitm.edu.my/ojs/index.php/Abrij/article/view/4138

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Articles