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Gender diversity and earnings management: The case of female directors with financial background

Gender diversity and earnings management: The case of female directors with financial background
Gender diversity and earnings management: The case of female directors with financial background
Past evidence generally suggests that the presence of female directors on corporate boards tends to improve earnings quality due to these directors’ superior monitoring abilities. However, it is not clear which characteristics and skills of female directors drive such abilities. In this paper, we focus on the financial background of female directors, an area which remains largely unexplored in existing literature. The results show that the participation of female directors with relevant financial background improves earnings quality more than the participation of female directors without such background. In addition, our findings suggest that only female directors possessing relevant financial background and having fewer outside directorships are able to mitigate earnings management and therefore overcommitting expert female directors with more outside directorships would diminish their monitoring ability. We did not find any evidence suggesting that female directors without relevant financial background are able to mitigate earnings management, irrespective of their outside directorships or tenure. We interpret our findings within a theoretical framework that draws on a number of economic and social theories. The results are generally robust after controlling for potential endogeneity problems.
Earnings management, female directors, financial expertise, economic versus social theories.
0924-865X
Zalata, Alaa
0fc2c56d-97ad-44ce-ab31-63ca335dcef6
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Alsohagy, Mostafa Hussien
6fda62c3-e7fd-4bc6-b59a-bee03b01c970
Malagila, John
cc93732f-b2bd-49c9-843e-4a6039b4124c
Zalata, Alaa
0fc2c56d-97ad-44ce-ab31-63ca335dcef6
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Alsohagy, Mostafa Hussien
6fda62c3-e7fd-4bc6-b59a-bee03b01c970
Malagila, John
cc93732f-b2bd-49c9-843e-4a6039b4124c

Zalata, Alaa, Ntim, Collins, Alsohagy, Mostafa Hussien and Malagila, John (2021) Gender diversity and earnings management: The case of female directors with financial background. Review of Quantitative Finance and Accounting. (doi:10.1007/s11156-021-00991-4).

Record type: Article

Abstract

Past evidence generally suggests that the presence of female directors on corporate boards tends to improve earnings quality due to these directors’ superior monitoring abilities. However, it is not clear which characteristics and skills of female directors drive such abilities. In this paper, we focus on the financial background of female directors, an area which remains largely unexplored in existing literature. The results show that the participation of female directors with relevant financial background improves earnings quality more than the participation of female directors without such background. In addition, our findings suggest that only female directors possessing relevant financial background and having fewer outside directorships are able to mitigate earnings management and therefore overcommitting expert female directors with more outside directorships would diminish their monitoring ability. We did not find any evidence suggesting that female directors without relevant financial background are able to mitigate earnings management, irrespective of their outside directorships or tenure. We interpret our findings within a theoretical framework that draws on a number of economic and social theories. The results are generally robust after controlling for potential endogeneity problems.

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Accepted/In Press date: 11 May 2021
e-pub ahead of print date: 24 June 2021
Additional Information: Publisher Copyright: © 2021, The Author(s). Copyright: Copyright 2021 Elsevier B.V., All rights reserved.
Keywords: Earnings management, female directors, financial expertise, economic versus social theories.

Identifiers

Local EPrints ID: 449223
URI: http://eprints.soton.ac.uk/id/eprint/449223
ISSN: 0924-865X
PURE UUID: c69cb5ef-5229-4318-93bd-9dcb3784255a
ORCID for Alaa Zalata: ORCID iD orcid.org/0000-0003-2018-4313
ORCID for Collins Ntim: ORCID iD orcid.org/0000-0002-1042-4056
ORCID for John Malagila: ORCID iD orcid.org/0000-0001-5327-2286

Catalogue record

Date deposited: 20 May 2021 16:30
Last modified: 26 Nov 2021 03:05

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Contributors

Author: Alaa Zalata ORCID iD
Author: Collins Ntim ORCID iD
Author: Mostafa Hussien Alsohagy
Author: John Malagila ORCID iD

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