Family control and its impact on the effectiveness of board diversity in driving corporate financial performance

Purpose This study investigates how board diversity interacts with family control to influence corporate financial performance (CFP), relying on agency theory, resource dependence theory, and socio-emotional wealth theory. Design/methodology/approach Using panel data from 72 Malaysian family firms between 2018 and 2022, this study employs the system generalized method of moments to examine the effects of board independence, gender diversity, education level, educational background, and foreign representation on CFP, while testing the moderating role of family control. Findings Gender diversity consistently enhances CFP, but business-related educational backgrounds show a negative association. These effects intensify under stronger family influence. Research limitations/implications This study is based on five years of data from 72 Malaysian family firms, which narrows the range of observable governance patterns and may not be directly generalizable to other jurisdictions. Practical implications This study provides actionable insights for family firms, suggesting that gender-diverse boards enhance profitability, while overreliance on specialized educational expertise may be counterproductive. Family business owners should align board composition with family values and long-term objectives. Social implications By highlighting the benefits of gender diversity and inclusive governance, this study contributes to broader efforts promoting equity and sustainability in corporate leadership. It also supports policy development aimed at improving governance standards in family-owned businesses, particularly within emerging economies. Originality/value This study offers a comprehensive view of governance in emerging-market family firms by adopting a multidimensional measure of family control and demonstrating that the impact of board diversity depends on the socio-emotional priorities that shape decision structures in family-controlled environments.