Financial reporting quality effects of imposing (gender) quotas on boards of directors

Lara, Juan Manuel M Garcia; Penalva, José; Scapin, Mariano

doi:10.1016/j.jaccpubpol.2021.106921

Cited by 11 publications

(10 citation statements)

References 96 publications

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“…Consequently, consistent with prior research, this paper will use accruals models as proxies of financial reporting quality (Berrill et al. , 2021; García Lara et al. , 2022; Reid et al.…”

Section: Notesmentioning

confidence: 89%

“…, 2017; Thiruvadi and Huang, 2011). In contrast, other studies indicate that female directors are not different from their counterparts when performing executive functions or carrying out monitoring tasks in developed and emerging markets (García Lara et al. , 2022; Waweru and Prot, 2018; Arun et al.…”

Section: Introductionmentioning

confidence: 85%

“…To achieve the research aim and objectives, data has been collected from non-financial companies listed on the EGX as explained in the following sub-section. Based on prior research (García Lara et al. , 2022; Berrill et al.…”

Section: Methodsmentioning

confidence: 99%

“…In this case and on the one hand, many countries mandate a quota of female directors on the board or require a specified number to represent women to break a glass ceiling [1]. In 2003, Norway was the first county to require a quota of female directors on the board by enforcing Norwegian firms to appoint 40% women on the board (Garc ıa Lara et al, 2022;Shin et al, 2020). Later, many developed and developing countries around the world followed Norway to obligate a quota of female directors (Belaounia et al, 2020).…”

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confidence: 99%

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Female leadership and financial reporting quality in Egypt

El-Dyasty

Elamer

2022

JAAR

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PurposeMany countries are enacting regulations or/and recommendations to promote gender equality in the workplace, especially in the top leadership and management positions. However, despite current research on gender diversity and firm outcomes, the authors know comparatively little about how different female leadership roles drive such outcomes. This study explores this notion in an emerging market by examining the effect of female leadership on financial reporting quality in Egypt.Design/methodology/approachThis study uses multiple regression analyses for a sample of 1,686 firm-year observations listed on the Egyptian Stock Exchange over the period 2011–2020.FindingsThis study’s results show that female directors, female executives and females on audit committees are positively associated with financial reporting quality. Further, the results suggest that executive female directors are less involved in income decreasing earnings management practices. The findings are robust to possible omitted variables bias, alternative measurements and endogeneity issues. Taken together, the results are in line with the view that gender diversity is an effective monitoring instrument, which attenuates agency conflict and thus upholds financial reporting quality.Research limitations/implicationsFuture research may expand the analysis performed in this study by using other proxies of financial reporting quality (e.g. earnings persistence, earnings predictability, conservatism and restatements). Also, the authors did not investigate the characteristics related to female directors (e.g. education, experience and age) due to data availability. Future research may examine the effect of these characteristics on female directors regarding financial reporting quality.Practical implicationsThe evidence about the importance of female leadership in shaping financial reporting quality may inform future policy and regulatory initiatives.Originality/valueThis study contributes to the growing literature related to gender diversity. First, this study extensively investigates the leadership aspects related to female directors in both mentoring and executive positions. Second, the evidence reached is based on three different proxies of financial reporting quality. Thus, unlike previous studies, conclusions were reached based on a solid basis to support the reliability of the results. These findings should be of great interest to policymakers, academics and stakeholders.

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“…Consequently, consistent with prior research, this paper will use accruals models as proxies of financial reporting quality (Berrill et al. , 2021; García Lara et al. , 2022; Reid et al.…”

Section: Notesmentioning

confidence: 89%

Section: Introductionmentioning

confidence: 85%

Section: Methodsmentioning

confidence: 99%

mentioning

confidence: 99%

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Female leadership and financial reporting quality in Egypt

El-Dyasty

Elamer

2022

JAAR

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“…Gender diversity enhances not only TMTs' business expertise and monitoring skills (Gull et al, 2018) but also improves accounting quality. However, it should be noted that large changes to board composition within a short time negatively affect financial reporting (García et al, 2022).…”

Section: Discussionmentioning

confidence: 99%

Does top management team diversity affect accounting quality? Empirical evidence from Germany

et al. 2023

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Earnings management decisions and ineffective monitoring activities have contributed to financial accounting scandals and reduced confidence in firms’ reporting quality among potential investors, lenders and other creditors. The implementation of an effective top management team (TMT) is considered essential in this context. It is well known that top managers have considerable discretion over firms’ financial reporting since they choose whether and how to manage earnings. However, research has yet to establish the relationship between top managers’ diversity attributes and firms’ earnings management levels. Therefore, this study analyses whether and how top managers’ nationality, gender and age diversity are associated with accounting quality. Based on a sample of German DAX 30 listed firms from 2011 to 2018, we found that diversity in TMT nationality and gender have a positive impact on accounting quality. This relationship is context-dependent and negatively moderated by the tenure of the chief financial officer. Our findings provide novel insights on accounting quality for practitioners such as investors, regulators and stock corporations. The implications of this study further advance the academic debate on diversity in TMTs and its effects on earnings management.

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