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Female directors and earnings management: Evidence from UK companies

Author

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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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    References listed on IDEAS

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    Cited by:

    1. repec:pdc:jrnbeh:v:14:y:2018:i:3:p:451-476 is not listed on IDEAS
    2. 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.
    3. Nekhili, Mehdi & Nagati, Haithem & Chtioui, Tawhid & Nekhili, Ali, 2017. "Gender-diverse board and the relevance of voluntary CSR reporting," International Review of Financial Analysis, Elsevier, vol. 50(C), pages 81-100.
    4. Huang, Haijie & Lee, Edward & Lyu, Changjiang & Zhu, Zhenmei, 2016. "The effect of accounting academics in the boardroom on the value relevance of financial reporting information," International Review of Financial Analysis, Elsevier, vol. 45(C), pages 18-30.
    5. repec:eee:finana:v:55:y:2018:i:c:p:170-183 is not listed on IDEAS
    6. repec:eee:jocaae:v:13:y:2017:i:2:p:148-165 is not listed on IDEAS
    7. repec:eee:bracre:v:50:y:2018:i:3:p:255-274 is not listed on IDEAS
    8. repec:spr:jecfin:v:42:y:2018:i:2:d:10.1007_s12197-017-9397-7 is not listed on IDEAS
    9. repec:bla:acctfi:v:58:y:2018:i:1:p:57-89 is not listed on IDEAS

    More about this item

    Keywords

    Earnings management; Gender diversity of boards; Financial reporting;

    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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