Does the Presence of Female Executives Curb Earnings Management? Evidence from Korea

Abstract

We investigate the role of female executives in curbing earnings management behaviour in Korea, a country known for its strong male-dominant culture. In a sample of Korean firms from 2002 to 2010, we find that female presence in top management is negatively associated with discretionary accruals, suggesting that gender diversity in senior management deters opportunistic financial reporting even in a highly male-dominant corporate environment. Further, this association is primarily observed in firms with stronger (weaker) female (male) dominance. This finding is consistent with the idea that female executives can exert more influence on corporate decisions in a more female-friendly environment. These findings have implications for academics and practitioners seeking to understand the impact of the role of top executive gender diversity in corporate accounting practices.

Female in board and earnings management: Evidence in Indonesia non-financial firms

“…The results of this study are supported by research conducted by Ye et al (2010), who also found that the gender of the management board did not affect corporate earnings management. The results of this study contradict the research conducted by Kim et al (2017), Hala (2019), Harakeh et al (2019), who found that females in the management board negatively affected earnings management.…”

“…Previous studies relating to the influence of gender of the board of directors on earnings management conducted by Hala (2019) found that women in upper management had a negative effect on earnings management. This is also supported by research conducted by Harakeh et al (2019) and Kim et al (2017). The opposite is obtained from research conducted by Ye et al (2010) found that there is no difference in earnings quality in firms managed by men and women.…”

“…This is also supported by research conducted by Hala (2019) and Harakeh et al (2019), who found that women in upper management can reduce earnings management. Kim et al (2017) also found that female in management board had a negative effect on earnings management H 2 : More female presence on the board of directors has…”

The role of the company secretary in facilitating board effectiveness: reporting and compliance

“…Potential gender differences at the executive level have also been examined in the financial reporting context. Gender differences in the top management team and opportunistic financial reporting have been found by Kim et al (2017). Zalata et al .…”

“…Potential gender differences at the executive level have also been examined in the financial reporting context. Gender differences in the top management team and opportunistic financial reporting have been found by Kim et al (2017). Zalata et al (2019) report observable differences in financial reporting behaviour between male and female CEOs and attribute the difference to risk aversion rather than ethical sensitivity.…”