IDEAS home Printed from https://ideas.repec.org/a/sae/ausman/v41y2016i4p719-734.html
   My bibliography  Save this article

Women in the boardroom and fraud: Evidence from Australia

Author

Listed:
  • Alessandra Capezio

    (Research School of Management, ANU College of Business and Economics, Australian National University, Canberra, ACT, Australia)

  • Astghik Mavisakalyan

    (Bankwest Curtin Economics Centre, Curtin Business School, Curtin University, Perth, WA, Australia)

Abstract

We examine the relationship between women’s representation on corporate boards and fraud. Drawing on a discussion of existing studies, we hypothesise that increasing women’s representation on boards can help mitigate fraud. We provide validation to our conjecture through an empirical analysis of 128 publicly listed companies in Australia. We show that the increase in women’s representation on company boards is associated with a decreased probability of fraud. We demonstrate the consistency of this result across different robustness checks. We believe that our findings could be of interest to policy makers interested in enhancing board governance and monitoring.

Suggested Citation

  • Alessandra Capezio & Astghik Mavisakalyan, 2016. "Women in the boardroom and fraud: Evidence from Australia," Australian Journal of Management, Australian School of Business, vol. 41(4), pages 719-734, November.
    • Handle: RePEc:sae:ausman:v:41:y:2016:i:4:p:719-734
    DOI: 10.1177/0312896215579463
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0312896215579463
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0312896215579463?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Monash Economics Working Papers archive-03, Monash University, Department of Economics.
    2. Hart, Oliver, 1995. "Corporate Governance: Some Theory and Implications," Economic Journal, Royal Economic Society, vol. 105(430), pages 678-689, May.
    3. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    4. Kevin Campbell & Antonio Mínguez-Vera, 2008. "Gender Diversity in the Boardroom and Firm Financial Performance," Journal of Business Ethics, Springer, vol. 83(3), pages 435-451, December.
    5. Swamy, Anand & Knack, Stephen & Lee, Young & Azfar, Omar, 2001. "Gender and corruption," Journal of Development Economics, Elsevier, vol. 64(1), pages 25-55, February.
    6. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-685, May.
    7. Roland G. Fryer & Steven D. Levitt, 2004. "The Causes and Consequences of Distinctively Black Names," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 767-805.
    8. Astghik Mavisakalyan, 2014. "Women in cabinet and public health spending: evidence across countries," Economics of Governance, Springer, vol. 15(3), pages 281-304, August.
    9. Elizabeth Webb, 2004. "An Examination of Socially Responsible Firms’ Board Structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 8(3), pages 255-277, June.
    10. Saku Aura & Gregory D. Hess, 2010. "What’S In A Name?," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 214-227, January.
    11. Les Coleman & Sean Pinder, 2010. "What were they thinking? Reports from interviews with senior finance executives in the lead-up to the GFC," Applied Financial Economics, Taylor & Francis Journals, vol. 20(1-2), pages 7-14.
    12. Claude Francoeur & Réal Labelle & Bernard Sinclair-Desgagné, 2008. "Gender Diversity in Corporate Governance and Top Management," Journal of Business Ethics, Springer, vol. 81(1), pages 83-95, August.
    13. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 605-628, November.
    14. Nina Smith & Valdemar Smith & Mette Verner, 2006. "Do women in top management affect firm performance?A panel study of 2,500 Danish firms," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 55(7), pages 569-593, October.
    15. Yang Xu & Elizabeth Carson & Neil Fargher & Liwei Jiang, 2013. "Responses by Australian auditors to the global financial crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(1), pages 301-338, March.
    16. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    17. M. Fernanda Rivas, 2013. "An Experiment On Corruption And Gender," Bulletin of Economic Research, Wiley Blackwell, vol. 65(1), pages 10-42, January.
    18. Peter Kien Pham & Jo-Ann Suchard & Jason Zein, 2011. "Corporate governance and alternative performance measures: evidence from Australian firms," Australian Journal of Management, Australian School of Business, vol. 36(3), pages 371-386, December.
    19. Phyllis Tharenou, 1990. "Psychological Approaches for Investigating Women's Career Advancement," Australian Journal of Management, Australian School of Business, vol. 15(2), pages 363-378, December.
    20. Chen, Gongmeng & Firth, Michael & Gao, Daniel N. & Rui, Oliver M., 2006. "Ownership structure, corporate governance, and fraud: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 12(3), pages 424-448, June.
    21. Farrell, Kathleen A. & Hersch, Philip L., 2005. "Additions to corporate boards: the effect of gender," Journal of Corporate Finance, Elsevier, vol. 11(1-2), pages 85-106, March.
    22. Dollar, David & Fisman, Raymond & Gatti, Roberta, 2001. "Are women really the "fairer" sex? Corruption and women in government," Journal of Economic Behavior & Organization, Elsevier, vol. 46(4), pages 423-429, December.
    23. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-474, June.
    24. David A. Carter & Betty J. Simkins & W. Gary Simpson, 2003. "Corporate Governance, Board Diversity, and Firm Value," The Financial Review, Eastern Finance Association, vol. 38(1), pages 33-53, February.
    25. Yang Xu & Alicia Liwei Jiang & Neil Fargher & Elizabeth Carson, 2011. "Audit Reports in Australia during the Global Financial Crisis," Australian Accounting Review, CPA Australia, vol. 21(1), pages 22-31, March.
    26. Burns, Natasha & Kedia, Simi, 2006. "The impact of performance-based compensation on misreporting," Journal of Financial Economics, Elsevier, vol. 79(1), pages 35-67, January.
    27. Ronald C. Anderson & David M. Reeb & Arun Upadhyay & Wanli Zhao, 2011. "The Economics of Director Heterogeneity," Financial Management, Financial Management Association International, vol. 40(1), pages 5-38, March.
    28. Daiji Kawaguchi & Junko Miyazaki, 2009. "Working mothers and sons’ preferences regarding female labor supply: direct evidence from stated preferences," Journal of Population Economics, Springer;European Society for Population Economics, vol. 22(1), pages 115-130, January.
    29. Larcker, David F. & Rusticus, Tjomme O., 2010. "On the use of instrumental variables in accounting research," Journal of Accounting and Economics, Elsevier, vol. 49(3), pages 186-205, April.
    30. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    31. Emma L. Schultz & David T. Tan & Kathleen D. Walsh, 2010. "Endogeneity and the corporate governance - performance relation," Australian Journal of Management, Australian School of Business, vol. 35(2), pages 145-163, August.
    32. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    33. Galbreath, Jeremy, 2011. "Are there gender-related influences on corporate sustainability? A study of women on boards of directors," Journal of Management & Organization, Cambridge University Press, vol. 17(1), pages 17-38, January.
    34. J.H. Marinova & J. Plantenga & C.L.H.S. Remery, 2010. "Gender Diversity and Firm Performance: Evidence from Dutch and Danish Boardrooms," Working Papers 10-03, Utrecht School of Economics.
    35. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-630, October.
    36. Dreber, Anna & Johannesson, Magnus, 2008. "Gender differences in deception," Economics Letters, Elsevier, vol. 99(1), pages 197-199, April.
    37. Daniela Beckmann & Lukas Menkhoff, 2008. "Will Women Be Women? Analyzing the Gender Difference among Financial Experts," Kyklos, Wiley Blackwell, vol. 61(3), pages 364-384, August.
    38. Mohammad I Azim, 2012. "Corporate governance mechanisms and their impact on company performance: A structural equation model analysis," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 481-505, December.
    39. Kenneth A. Frank, 2000. "Impact of a Confounding Variable on a Regression Coefficient," Sociological Methods & Research, , vol. 29(2), pages 147-194, November.
    40. Liu, Yu & Wei, Zuobao & Xie, Feixue, 2014. "Do women directors improve firm performance in China?," Journal of Corporate Finance, Elsevier, vol. 28(C), pages 169-184.
    41. Kray, Laura J. & Haselhuhn, Michael P., 2011. "Male Pragmatism in Ethical Decision Making," Institute for Research on Labor and Employment, Working Paper Series qt05n3d6pj, Institute of Industrial Relations, UC Berkeley.
    42. Tamás Bartus, 2005. "Estimation of marginal effects using margeff," Stata Journal, StataCorp LP, vol. 5(3), pages 309-329, September.
    43. Deborah Dahlen Zelechowski & Diana Bilimoria, 2004. "Characteristics of Women and Men Corporate Inside Directors in the US," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(3), pages 337-342, July.
    44. Klein, April, 2002. "Audit committee, board of director characteristics, and earnings management," Journal of Accounting and Economics, Elsevier, vol. 33(3), pages 375-400, August.
    45. Stephen Brammer & Andrew Millington & Stephen Pavelin, 2007. "Gender and Ethnic Diversity Among UK Corporate Boards," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 393-403, March.
    46. Irene van Staveren, 2014. "The Lehman Sisters hypothesis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(5), pages 995-1014.
    47. Niclas L. Erhardt & James D. Werbel & Charles B. Shrader, 2003. "Board of Director Diversity and Firm Financial Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(2), pages 102-111, April.
    48. Paul Coram & Colin Ferguson & Robyn Moroney, 2008. "Internal audit, alternative internal audit structures and the level of misappropriation of assets fraud," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 48(4), pages 543-559, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mehdi Nekhili & Hayette Gatfaoui, 2013. "Are Demographic Attributes and Firm Characteristics Drivers of Gender Diversity? Investigating Women’s Positions on French Boards of Directors," Journal of Business Ethics, Springer, vol. 118(2), pages 227-249, December.
    2. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, September.
    3. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2015. "Does boardroom gender diversity matter? Evidence from a transitional economy," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 184-202.
    4. Ajay Palvia & Emilia Vähämaa & Sami Vähämaa, 2015. "Are Female CEOs and Chairwomen More Conservative and Risk Averse? Evidence from the Banking Industry During the Financial Crisis," Journal of Business Ethics, Springer, vol. 131(3), pages 577-594, October.
    5. Laura Cabeza-García & Esther B. Brío & Carlos Rueda, 2021. "The moderating effect of innovation on the gender and performance relationship in the outset of the gender revolution," Review of Managerial Science, Springer, vol. 15(3), pages 755-778, April.
    6. Aruoriwo Marian Chijoke-Mgbame & Agyenim Boateng & Chijoke Oscar Mgbame, 2020. "Board gender diversity, audit committee and financial performance: evidence from Nigeria," Accounting Forum, Taylor & Francis Journals, vol. 44(3), pages 262-286, July.
    7. P. López-Delgado & J. Diéguez-Soto, 2020. "Indebtedness in family-managed firms: the moderating role of female directors on the board," Review of Managerial Science, Springer, vol. 14(4), pages 727-762, August.
    8. Rey Dang & Anne Françoise Bender & Marie José Scotto, 2014. "Women on French Corporate Board of Directors: How Do They Differ from their Male Counterparts?," Working Papers 2014-54, Department of Research, Ipag Business School.
    9. repec:ipg:wpaper:2014-054 is not listed on IDEAS
    10. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2014. "A dynamic estimation of governance structures and financial performance for Singaporean companies," Economic Modelling, Elsevier, vol. 40(C), pages 1-11.
    11. García Lara, Juan Manuel & García Osma, Beatriz & Mora, Araceli & Scapin, Mariano, 2017. "The monitoring role of female directors over accounting quality," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 651-668.
    12. Low, Daniel C.M. & Roberts, Helen & Whiting, Rosalind H., 2015. "Board gender diversity and firm performance: Empirical evidence from Hong Kong, South Korea, Malaysia and Singapore," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 381-401.
    13. repec:ipg:wpaper:201413 is not listed on IDEAS
    14. Maria Lucas-Pérez & Antonio Mínguez-Vera & Juan Baixauli-Soler & Juan Martín-Ugedo & Gregorio Sánchez-Marín, 2015. "Women on the Board and Managers’ Pay: Evidence from Spain," Journal of Business Ethics, Springer, vol. 129(2), pages 265-280, June.
    15. Farag, Hisham & Mallin, Chris, 2017. "Board diversity and financial fragility: Evidence from European banks," International Review of Financial Analysis, Elsevier, vol. 49(C), pages 98-112.
    16. Belaounia, Samia & Tao, Ran & Zhao, Hong, 2020. "Gender equality's impact on female directors’ efficacy: A multi-country study," International Business Review, Elsevier, vol. 29(5).
    17. Irene Wei Kiong Ting & Wei-Kang Wang & Wen-Min Lu & Yun-Jung Chen, 2021. "Do female directors will have impact on corporate performance?," Review of Managerial Science, Springer, vol. 15(3), pages 611-631, April.
    18. María Consuelo Pucheta‐Martínez & Inmaculada Bel‐Oms, 2019. "What have we learnt about board gender diversity as a business strategy? The appointment of board subcommittees," Business Strategy and the Environment, Wiley Blackwell, vol. 28(2), pages 301-315, February.
    19. Collins Ntim, 2015. "Board diversity and organizational valuation: unravelling the effects of ethnicity and gender," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 167-195, February.
    20. María Consuelo Pucheta-Martínez & Inmaculada Bel-Oms & Gustau Olcina-Sempere, 2018. "Female Institutional Directors on Boards and Firm Value," Journal of Business Ethics, Springer, vol. 152(2), pages 343-363, October.
    21. Hisham Farag & Chris Mallin, 2016. "The Impact of the Dual Board Structure and Board Diversity: Evidence from Chinese Initial Public Offerings (IPOs)," Journal of Business Ethics, Springer, vol. 139(2), pages 333-349, December.
    22. Kent Baker, H. & Pandey, Nitesh & Kumar, Satish & Haldar, Arunima, 2020. "A bibliometric analysis of board diversity: Current status, development, and future research directions," Journal of Business Research, Elsevier, vol. 108(C), pages 232-246.

    More about this item

    Keywords

    Australia; fraud; governance; women on boards;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ausman:v:41:y:2016:i:4:p:719-734. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.agsm.edu.au .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.