Abstract:
Purpose – The present research aims to determine the impact of Corporate
Governance most significant attribute board diversity on firm’s performance in the
context of Islamic and Conventional non-financial firms in Pakistan in Pre and during
Covid-19 period.
Design/methodology/approach – The analysis are made using the 130 non-financial
firms comprises of 51 Islamic firms listed in the KMI-30 and KMI all shares index,
and 79 conventional firms listed in the Pakistan Stock Exchange across various
indexes over the period of 2011-2020 utilizes the OLS and panel fixed effect
estimation technique for analysis. The robustness of findings is checked through
alternative estimation techniques.
Findings – The results show that in Islamic firms, board tenure diversity positively
while board gender diversity has negative impact on performance. In conventional
firms, board education and tenure diversity positively impact performance, while
board age diversity has a negative impact. In Pre-Covid-19, board tenure diversity
positively while age is negatively affected performance in Islamic firms. During
Covid-19, board education diversity positively influenced Islamic firm performance.
In Pre and during-Covid-19, board tenure diversity positively affected performance in
conventional firms. During Covid-19 only gender diversity negatively affected
performance in conventional firms. Other diversity indicators are insignificant in both
Islamic and Conventional firms.
Research limitations/implications – This study is conducted in the context of
Pakistani Islamic and Conventional firms; thus, the study's findings on board diversity
in Pakistani Islamic and conventional non-financial firms may not apply universally.
Generalizing these findings should be approached cautiously due to distinct
institutional and governance frameworks across economies.
Practical implications – To enhance firms' competitive performance, policymakers
should promote the incorporation of board members with diverse tenures and
educational backgrounds in Conventional firms while diverse tenures in Islamic firms
that align with the organization's needs. By adopting the education and tenure wise
diverse board structure, firms can attract a wide range of stakeholders and effectively
meet their expectations, thereby improving overall firm performance.
