Asian Journal of Accounting and Governance 11: 61–70 (2019) ISSN 2180-3838 (http://dx.doi.org/10.17576/AJAG-2019-11-06) Does Political Connection Moderate Women Directors’ Effect on CSR Disclosure? Evidence from Malaysia INTAN MAIZA ABD RAHMAN, NURUL NAZLIA JAMIL & KU NOR IZAH KU ISMAIL ABSTRACT The objectives of this paper are: to examine the moderating effect of government ownership on the relationship between women directors and corporate social responsibility (CSR) disclosure; and to study the moderating effect of politicians on boards on the relationship between women directors and corporate social responsibility (CSR) disclosure. This paper gathered information from companies’ annual reports for the year 2013. From a sample of 300 non-fnancial companies listed on Bursa Malaysia, this paper found that government ownership positively moderates women directors’ effect on CSR disclosure, while politicians on boards negatively moderate the effect. Results of this study add to the literature on factors infuencing women directors in their process of making decisions from the view of a developing country. As different variables of political connections affect CSR disclosure differently, companies may decide the most suitable situations to adapt to ensure the companies can perform at its best. The fndings may further alert policy makers to establish special provision of the appointment on board of directors with political interest. Keywords: Political connection; women directors; government ownership; politicians on board; CSR disclosure INTRODUCTION Corporate social responsibility ( CSR) activities and disclosure beneft companies in a number of ways. The benefits can be seen in terms of improved financial performance and frm value, as well as enhanced brand image and frms’ reputation (Amran & Siti-Nabiha 2009; Mohamad Taha 2013; Kahreh et al. 2014; Cahan et al. 2015; Usman & Amran 2015). With the benefts that may arise from implementing and disclosing CSR activities performed by companies, prior studies that used a sample of companies listed in Bursa Malaysia discovered that CSR and environmental disclosure are of low level (Othman Ishak et al. 2011; Ahmed Haji 2013; Fatima et al. 2015). In explaining factors that influence CSR disclosure, prior studies, for example Ahmed Haji (2013), Janggu et al. (2014) and Liao et al. (2015), provided evidence that corporate governance characteristics infuence CSR disclosure. The characteristics are among others board size, independent directors and ownership structure. Other studies such as Upadhyay and Zend (2014) explained that board diversity like age, gender, experience and culture may also infuence CSR disclosure. The Malaysian government as well as authoritative bodies like Bursa Malaysia and the Association of Chartered Certifed Accountants (ACCA) have taken plenty of efforts to improve the quantity and the quality of CSR disclosure in addition to efforts to improve corporate governance practices. According to the revised Malaysian Code on Corporate Governance (MCCG) (2017), Bursa Malaysia listed companies need to consider appointing more women directors to corporate boards. As stated in the Code, large companies are required to have 30% women directors, and other boards are also encouraged to achieve the 30% target. However, the latest statistics reported by the Minority Shareholder Watchdog Group ( MSWG) indicated a low representation of women directors: 8.6% in 2013, 9.1% in 2014, 9.9% in 2015, 10.6% in 2016 and 11.2% in 2017 (Minority Shareholder Watchdog Group 2018). Having women directors on boards could impact boards’ decision making differently; similarly, their low representation would also impact their infuence in the decision-making process. Jia and Zhang (2012), Giannarakis et al. (2014), and Liao et al. (2015) posited that women directors affect companies’ CSR disclosure in a positive way. Meanwhile, other research conducted by Shamil et al. (2014) and Muttakin et al. (2015) found a negative effect – companies disclose lesser amount of CSR information when there are women on corporate boards. Some studies, however, were unable to fnd any effects for having women directors on CSR disclosure (Kahreh et al. 2014; Bowrin 2013; Giannarakis 2014; Glass et al. 2015). In Malaysia, there is a limited number of studies that examine the impacts for having women on corporate board of directors. This situation may happen because of the awareness to have women directors on boards is low prior to the requirement to have 30% women directors in 2012. Government and political interventions need to be considered when examining issues using the Malaysian context because they infuence companies’ business operations and decision-making processes. There is unambiguous evidence that political connections bring in benefts and costs to frms. However, a major Book 1.indb 61 10/17/19 10:08 AM