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Does Gender Interact with Financial Reporting Quality?

Author

Listed:
  • Ivana Tadić
  • Željana Aljinović Barać
  • Jurica Kurtović

Abstract

The underrepresentation of women in leadership positions is common evidence of gender inequality. Consequently, the European Commission brought a directive to balance the underrepresentation of women on boards in EU countries. Often, females are presumed to be less favourable for top management positions in successful companies and are faced with different obstacles during their careers. However, they possess many different characteristics, which makes them excellent leaders and may create positive differences in financial reporting quality (FRQ). Croatia still lags behind other EU countries in terms of the share of women within corporate boards; therefore, in this paper, we aim to investigate whether the FRQ differs based on the boardroom's gender structure. The research is conducted on a sample of listed Croatian companies using univariate and multivariate statistical methods. Two sub-samples were formed in order to capture the effects of the Gender Equality Act (GEA) application. Our results show that women are still underrepresented as board members despite the regulations that introduced a list of activities for gender equality. The gender structure of corporate boardrooms is significantly associated with FRQ, and issuing positive audit opinions is related to tilted-structured management boards, where up to 40% of the board members are women. The contribution of our research is twofold: to investigate the trends and level of gender inequality in leadership positions of Croatian listed companies, and to identify whether the gender structure of top management plays a significant role in a company's FRQ. Implications for Central European audience: The results of this study provide significant insight into the underrepresentation of women on corporate boards within EU countries. Our findings and recommendations may be of special interest, particularly for Central European countries that share the experience of transition from planned to market economy with Croatia and are characterised by similar institutional, political, economic and financial systems. The topic is crucial in contemporary business, especially following and adapting to the directives brought by the European Commission, pinpointing the issue as a current and future challenge.

Suggested Citation

  • Ivana Tadić & Željana Aljinović Barać & Jurica Kurtović, 2025. "Does Gender Interact with Financial Reporting Quality?," Central European Business Review, Prague University of Economics and Business, vol. 2025(3), pages 65-85.
    • Handle: RePEc:prg:jnlcbr:v:2025:y:2025:i:3:id:387:p:65-85
    DOI: 10.18267/j.cebr.387
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    References listed on IDEAS

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    1. Manimore Makri & Leo Themjung Makan & Kailash Chandra Kabra, 2023. "Board characteristics and integrated reporting in an emerging market: evidence from India," Asian Journal of Accounting Research, Emerald Group Publishing Limited, vol. 9(1), pages 2-12, October.
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    5. María del Carmen Triana & Toyah L. Miller & Tiffany M. Trzebiatowski, 2014. "The Double-Edged Nature of Board Gender Diversity: Diversity, Firm Performance, and the Power of Women Directors as Predictors of Strategic Change," Organization Science, INFORMS, vol. 25(2), pages 609-632, April.
    6. Fuad Rakhman & Singgih Wijayana, 2019. "Determinants of Financial Reporting Quality in the Public Sector: Evidence from Indonesia," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 54(03), pages 1-35, September.
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    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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