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Female directors and earnings management: Evidence from UK companies

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  • Arun, Thankom Gopinath
  • Almahrog, Yousf Ebrahem
  • Ali Aribi, Zakaria

Abstract

Since the gender diversity of boards and reporting of earnings are two most debated issues in the corporate world, the paper examined how the presence of women directors on the corporate board influence earnings management practices. We found that firms with a higher number of female and independent female directors are adopting restrained earnings management practices in the UK. We further made a distinction between complex (high debt) and simple (low debt) companies, and the outcomes reveal that female directors have a positive effect on the earnings management in simple companies. The paper contributes to the debate on gender diversity on boards, and its impact on the use of accounting discretion in financial reporting.

Suggested Citation

  • Arun, Thankom Gopinath & Almahrog, Yousf Ebrahem & Ali Aribi, Zakaria, 2015. "Female directors and earnings management: Evidence from UK companies," International Review of Financial Analysis, Elsevier, vol. 39(C), pages 137-146.
    • Handle: RePEc:eee:finana:v:39:y:2015:i:c:p:137-146
    DOI: 10.1016/j.irfa.2015.03.002
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    More about this item

    Keywords

    Earnings management; Gender diversity of boards; Financial reporting;
    All these keywords.

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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