Board composition and corporate social responsibility in an emerging market

Abstract

Purpose

The purpose of this paper is to examine the effect of board composition on corporate social responsibility (CSR) for selected Malaysian companies in Bursa Malaysia.

Design/methodology/approach

The paper analyses board composition and CSR of Malaysian (family and non-family) firms using linear regression analysis.

Findings

The empirical findings indicate that non-executive directors (NEDs) and independent non-executive directors (INEDs) designate a negative relationship, while women on board indicate a positive relationship. The only variable that positively affects the level of CSR initiatives is the presence of women directors. As for family and non-family business, the main findings are: a positive relationship between NEDs and CSR initiatives in non-family business and a negative relationship between INEDs and CSR for family-controlled business.

Research limitations/implications

This paper is limited only to selected companies on Bursa Malaysia over a period of two years. The paper suggests that board composition in an emerging market is relatively ineffective in improving CSR initiatives, with the exception of women on board. This is more prevalent in family business, as they do not seem to contribute toward humanizing or cultivating CSR in their companies.

Practical implications

This paper can be used as a reference by regulatory bodies to further investigate on the means as to how board composition can further contribute toward CSR initiatives, as these board members have inherent authorities and decision-making power. Composition and role of women directors in board needs to be further deliberated.

Originality/value

This paper contributes to the existing literature in terms of the roles of board composition on CSR initiatives. It further highlights the difference in the aforementioned relationship between family and non-family business.

Citation

Sundarasen, S.D.D., Je-Yen, T. and Rajangam, N. (2016), "Board composition and corporate social responsibility in an emerging market", Corporate Governance, Vol. 16 No. 1, pp. 35-53. https://doi.org/10.1108/CG-05-2015-0059