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Non-executive female directors and earnings management using classification shifting

Non-executive female directors and earnings management using classification shifting
Non-executive female directors and earnings management using classification shifting
Prior business studies have focused on the role of female directors in constraining accruals-based earnings management with relatively less attention paid to other less risky earnings management methods. In contrast to these studies, we investigate whether non-executive female directors go beyond the neoclassical measurement and recognition-based accounting issues and pay more attention to the classification of core expenses within the income statement. We find evidence supporting the ongoing debate that classification shifting is less likely to attract the attention of either external or internal monitors. We did not find evidence that non-executive female directors are more likely to challenge managers’ opportunistic classificatory practices; rather, the results reveal a significant positive relationship between non-executive female directors and classification shifting. Finally, our finding remains robust after controlling for potential endogeneity problems and tokenism.
0148-2963
Zalata, Alaa
0fc2c56d-97ad-44ce-ab31-63ca335dcef6
Abdelfattah, Tarek
cc148f5c-7eb5-4dc5-8213-4ed6bc1648d9
Zalata, Alaa
0fc2c56d-97ad-44ce-ab31-63ca335dcef6
Abdelfattah, Tarek
cc148f5c-7eb5-4dc5-8213-4ed6bc1648d9

Zalata, Alaa and Abdelfattah, Tarek (2021) Non-executive female directors and earnings management using classification shifting. Journal of Business Research. (In Press)

Record type: Article

Abstract

Prior business studies have focused on the role of female directors in constraining accruals-based earnings management with relatively less attention paid to other less risky earnings management methods. In contrast to these studies, we investigate whether non-executive female directors go beyond the neoclassical measurement and recognition-based accounting issues and pay more attention to the classification of core expenses within the income statement. We find evidence supporting the ongoing debate that classification shifting is less likely to attract the attention of either external or internal monitors. We did not find evidence that non-executive female directors are more likely to challenge managers’ opportunistic classificatory practices; rather, the results reveal a significant positive relationship between non-executive female directors and classification shifting. Finally, our finding remains robust after controlling for potential endogeneity problems and tokenism.

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More information

Accepted/In Press date: 25 April 2021

Identifiers

Local EPrints ID: 448692
URI: http://eprints.soton.ac.uk/id/eprint/448692
ISSN: 0148-2963
PURE UUID: 8895dcc4-c464-4c5e-9b41-4e43e559c213
ORCID for Alaa Zalata: ORCID iD orcid.org/0000-0003-2018-4313

Catalogue record

Date deposited: 30 Apr 2021 16:31
Last modified: 08 May 2021 01:49

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Contributors

Author: Alaa Zalata ORCID iD
Author: Tarek Abdelfattah

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