Female board directorship and earnings management

Abstract

Purpose This paper aims to examine the impact of female board directorship on the extent of earnings management. Design/methodology/approach The research hypotheses have been tested using both univariate and multivariate analyzes based on a sample of 198 firm-year observations from closely-held family firms listed on the SBF 120 over the period 2010–2018. Findings The empirical results first indicate that female board participation reduces the level of earnings management. When looking at women positions in the companies’ boardrooms, the authors reveal that the negative linkage between female board directorship and earnings management remains constant for independent female directors while the opposite holds for their family-affiliated counterparts. Further, the gender quota reform is shown to mitigate the adverse relationship between gender-diverse corporate boards and the extent of earnings management. These results seem sound, as they hold unchanged for the several measures of, both, boardroom gender diversity and earnings management used in the empirical study. In a supplementary analysis, the authors provide evidence that the association between the presence of women directors on the companies’ boards and earnings management depends, in a different way, on the size of the audit firm in a joint auditing context. Originality/value The country and the period considered in this paper are noteworthy characteristics that enhance the value of this research. The present study is relevant because it examines the relationship between female boardroom participation and earnings management using a homogeneous sample of family-owned and -managed companies within which shareholders and board members share identical motives for manipulating earnings in one of the leading countries in the world with regard to family ownership dominance (i.e. France). Moreover, this paper is considered to be very timely, as it explores, contrarily to previous related studies, the years following the implementation of a mandatory gender quota reform in one of the less available countries, to date, that have amended a gender quota law. To the knowledge, besides France, there are a few markets (Norway, Belgium, Finland and Iceland) that have implemented such legislation.

Royal Family Members and Corporate Governance Characteristics: The Impact on Earnings Management in UA

“…These findings are explained by the idea that the increase of leverage may motivate the management to engage in earnings management practices to alleviate the negative impact of debt on the financial statements. However, Mnif and Cherif (2020) found no association between firm leverage and earnings management. Following prior studies, the current study suggests that earnings management in UAE is negatively associated with firm leverage.…”

“…El Guindy and Basuony (2018) found a negative relationship between firm size and earnings management. Moreover, in Tunisia, Mnif and Cherif (2020) revealed that earnings management is negatively associated with firm size. They argued that large firms are monitored by the government, which reduces the misbehaviour of the management.…”

“…In this model, a number of control variables are included because most prior literature finds these variables have an effect on earnings management (Nelwan & Tansuria, 2019;Alhadab et al, 2020;Mnif & Cherif, 2020). These control variables include firm size, firm profitability and firm leverage.…”

Corporate Social Responsibility and Real Earnings Management: Does Board Gender Diversity Matter?

“…In what follows, we will focus on board gender diversity as a possible control mechanism that underlies the relationship between CSR and REM. Several previous works concluded that the board gender diversity might constitute a mechanism that inhibits discretionary behaviours (Lakhal, Aguir, Lakhal, & Malek, 2015;Triki Damak, 2018;Orazalin, 2019;Mnif & Cherif, 2020). Thus, board gender diversity could moderate the expected negative relationship between CSR and REM.…”

Gender Diversity on the Board of Director and Firm Performance: Agency Theory Perspective

“…Regarding this, female directors influence changing norms on the board (Yang et al, 2019). Some studies conducted (Luo et al, 2017) on the association of manipulation activities, earning management (Gull et al, 2018), (Zalata et al, 2019), (Harakeh et al, 2019), (Arioglu, 2020), (Ammer & Ahmad-Zaluki, 2017), (Mnif & Cherif, 2020), and financial irregularities (Li & Li, 2020). (Li & Li, 2020) Female chairperson Committee audit…”