Accrual quality: The presence of women directors on audit committee boards

Abstract

This article examines whether the participation of women on audit committee boards enhances audit committee effectiveness to control earnings management practices. While numerous studies have investigated the effects of women audit committee on earnings management, empirical evidence is rather inconsistent. Therefore, it is imperative to investigate the impact of female representation on audit committee effectiveness. In order to address the objective of the study, we use cross-sectional version of the performance-adjusted current discretionary accruals model to detect earnings management (Kothari, Leone and Wasley, 2005). Using a sample of 356 companies for the year ended 2007; we found a significant negative relationship between the presence of women directors on audit committee boards and earning managements. The results suggest that the presence of women directors on audit committee boards reduces earning management practices.

Accounting expertise in the audit committee and earnings management

“…It is also found that LEV is positively and significantly related to ABSDA1 and ABSDA2. This positively significant result is consistent with previous studies (Al-Rassas & Kamardin, 2016;Saleh et al, 2005Saleh et al, , 2007Salleh & Haat, 2013;Salleh et al, 2012). This is because companies that face financial difficulties attempt to report higher returns in order to hide their financial constraints (Campa, 2015;Park & Shin, 2004).…”

“…This result is in line with Abdul-Rahman & Ali (2006), Mansor et al (2013), Saleh et al (2005), Saleh et al (2007) and Salleh et al (2012). It may be because large firms are seriously reviewed by the external capital markets and analysts compared to small firms (Park & Shin, 2004).…”

“…ACSIZE has an insignificant relationship with ABSDA1 and ABSDA2, which is in line with the majority of studies in Malaysia Chandrasegaram et al, 2013;Saleh et al, 2007;Salleh & Haat, 2013;Salleh et al, 2012). Similarly, there is no significant relationship between ACMEET and ABSDA1 or ABSDA2, which is in line with the majority of studies in Malaysia (Abdul-Rahman & Ali, 2006;Chandrasegaram et al, 2013;Mansor et al, 2013;Saleh et al, 2007).…”

“…However, it is slightly similar to Al-Rassas & Kamardin (2016), where it is 0.056. Regarding the other models used in previous studies, the mean value of ABSDA1 in this study is lower than ABSDA by using the Jones Model by Buniamin et al (2012), where it is 0.099, ABSDA by using Kothari et al (2005) by Salleh, Hashim, & Mohamad (2012), where it is 0.060 and ABSDA by using Kothari et al (2005) by , where it is 0.065. However, the mean value of ABSDA1 in this study is similar to other models used by other studies, such as AbdulRahman & Ali (2006), where it is 0.047.…”

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

“…The characteristics of women on the audit committee can reduce earnings management. This is supported by research conducted by Thiruvadi & Huang (2011), Qi & Tian (2012), Salleh et al (2012), Susanto (2016), and Florencea & Susanto (2019). The opposite was obtained from research conducted by Loualalen et al (2015), and Abdullah & Ismail (2016) found that gender on the audit committee had no effect on earnings management.…”