Director Remuneration as a Bridge: Unveiling the Impact of Board Diversity on Financial Performance in Malaysian Public Listed Companies-A conceptual Insight

Abstract

 This conceptual paper proposes a framework to examine the mediating role of director remuneration in the relationship between board diversity and company financial performance in Malaysia public listed companies. The study focuses on gender and educational diversity within the board of directors and their impact on financial outcomes, specifically using Economic Value Added (EVA) as the performance measure. Existing research indicates that a diverse board can enhance financial performance, and this paper explores how director remuneration might mediate this relationship. Drawing from Agency theory and Upper Echelon theory, the paper argues that the structure of director remuneration can influence strategic decision-making and drive organizational performance. the conceptual framework presented suggests that gender and educational diversity within the board can shape financial outcomes by aligning directors’ interests with the long-term goals of the company. The study aims to provide valuable insights for corporate governance, with the expectation that director remuneration will serve as a key link between diversity of board and company performance. future empirical research is needed to validate the proposed model and hypotheses.