Gender board diversity and corporate fraud: empirical evidence from US companies

Purpose - This study aims to examine the effect of gender board diversity on corporate fraud. Particularly, it is to gain empirical evidence whether firms with more female corporate leaders are more (less) likely to engage in corporate fraud. Design/methodology/approach - The authors use data of fraud firms from Accounting and Auditing Enforcement Releases. As a focus of the study, the authors take the fraud sample observations from the last 10 years, from 2011 to 2021. The idea is that the number of firms sectioned due to corporate fraud reached a peak in such periods. Findings - In the context of non-state-owned enterprise environments, the authors find female corporate leaders are less likely to engage in corporate fraud. However, among firms with a state-owned background, the authors’ empirical evidence shows that the roles of female corporate leaders remain under-represented in the boardrooms. As reported, the presence of female corporate leaders does not bring a significant impact on enhancing group ethical decision-making and governance quality. This situation does appear when political connections between firms and governments or politicians are prevalent. Research limitations/implications - This study has practical and theoretical implications. Given the increased pressure on companies around the globe to have more females in their boardrooms, this study provides insight into the effect of female corporate leaders on the prevalence of corporate fraud. As such, this study offers critical consideration for policymakers and regulators. Moreover, an analysis of whether and when the gender board diversity is associated with the firm’ propensity to perpetrate corporate fraud, particularly from the US corporate fraud, is sorely lacking. This study contributes to such gaps. Originality/value - This study provides insightful discussion about the topical issue of whether, and under what circumstances, female corporate leaders influence (or do not influence) corporate fraud.