Women on boards, firm earnings management (EM) and performance nexus: does gender diversity moderate the EM–performance relationship?

Abstract

Purpose This paper aims to shed light on an essential role that “female directors” on boards of companies in sub-Saharan Africa play towards corporate financial performance enhancement. The study observes how board gender diversity moderates the relationship between earnings management (EM) and financial performance of firms in sub-Saharan Africa from a dynamic perspective. Design/methodology/approach The study’s sample comprises 105 companies listed on the respective stock markets of nine sub-Saharan African countries. The data are collected from annual reports over the period 2007–2019, a total of 1,166 firm-year observations. Panel data models are used in the analyses. Findings The study finds that the performance effect of EM is contingent on board diversity and this finding persists even after controlling for dynamic endogeneity, simultaneity and unobserved time-invariant heterogeneity inherent in the EM and performance relationship. Research limitations/implications The findings should be understood within the context that, only available annual reports and audited financial statements that were filed with respective capital markets of the nine surveyed countries are used as source of information. Originality/value The current study is unique, in that, it is the first panel multi-cross-country investigation within Africa to introduce gender diversity in the study of the relationship between EM and firm performance. It therefore extends the agency theory by using gender diversity as a moderating variable in the EM–firm performance nexus.

Women’s Participation in Firms’ Management and Their Impact on Financial Performance: Pre-COVID-19 and COVID-19 Period Evidence

“…This result is in line with that of the cross-sectional analysis. Our results are moving in the direction of other studies' results [9,[39][40][41]45,47,58].…”

“…Ref. [45] highlighted the essential role of female directors on boards of companies in sub-Saharan Africa, proving that they affect corporate financial performance enhancement. Ref.…”

Direktur Perempuan dan Kinerja Perusahaan di Indonesia: Peran Moderasi Kepemilikan Asing

“…Dewan direksi yang memiliki persentase perempuan yang tinggi dipandang membawa dampak positif terhadap kinerja perusahaan (Ararat & Yurtoglu, 2021;Provasi & Harasheh, 2021;Moreno-Gómez et al, 2018;Campos-garcía, 2022). Hal ini dikarenakan keberadaan perempuan pada dewan direksi lebih mampu menjaga dan memastikan perusahaan menjalankan operasional sesuai dengan standar etika, sehingga akan menurunkan risiko penyalahgunaan wewenang dalam menjalankan perusahaan (Mensah & Onumah, 2022). Lebih jauh lagi, kemampuan mengkoordinasikan tugas operasi dan strategi perusahaan, dan keahlian analitis yang dimiliki oleh perempuan jauh lebih baik, sehingga hal JAIM: Jurnal Akuntansi Manado | 135 inilah yang membuat kinerja perusahaan semakin tinggi (Meah et al, 2021;Simionescu et al, 2021;Nyeadi et al, 2021;Mensah & Onumah, 2022).…”

Roles of board of directors and earnings management across SMEs life cycle: evidence from the UK

“…Although, previous literature provides evidence of how board characteristics influence EM practices in large enterprises (Abdou et al , 2021; Alves, 2023; Chatterjee and Rakshit, 2023; Chee and Tham, 2021; Cho and Chung, 2022; Cornett et al , 2009; Elsheikh et al , 2023; Goel and Kapoor, 2022; Liu and Lu, 2007; Mensah and Boachie, 2023; Mensah and Onumah, 2023; Musa et al , 2023; Prencipe and Bar-Yosef, 2011; Widagdo et al , 2022; Roy and Alfan, 2022; Sáenz González and García-Meca, 2014; Sehrawat et al , 2019; Sultana et al , 2017) and EM practices in small- and medium-sized enterprises (SMEs) (Balachandran et al , 2021; Chansarn and Chansarn, 2016; Chiu and Wei-Hua, 2020; Duarte, 2022; Gajdosikova et al , 2022; Gandía and Huguet, 2021; Höglund and Sundvik, 2016; Huang et al , 2022; Maglio et al , 2020; Martinez-Martinez et al , 2021; Park et al , 2021; Séverin and Veganzones, 2021). However, there is little research examining the link between the roles of BOD and earning management practices among SMEs (Chiu and Wei-Hua, 2020 and Maglio et al , 2020) and none specifically examines such relation among SMEs operating in the UK context.…”