Role of Directors Skills Diversity in Firm Performance: A Comparative Study

Abstract

This study investigates the impact of director skills diversity on firm performance in both Shariah-compliant and conventional firms within emerging Islamic markets, covering Pakistan, Malaysia, Indonesia, and Bangladesh from 2009 to 2018. It explores various director skill sets, including industry experience, expert skills, management proficiency, and economic acumen, and their associations with performance metrics such as Return on Assets (ROA), Return on Equity (ROE), and Tobin’s Q. The results reveal a significant positive association between board skills and firm performance, particularly in Shariah-compliant firms. Directors with expertise in Islamic finance and ethics play a crucial role in aligning decisions with Shariah principles, contributing to long-term value creation. This research offers insights for regulators, strategists, and stakeholders in shaping corporate governance practices and decision-making in diverse market contexts.