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A few good (wo)men? Gender diversity on Australian boards

Author

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  • Maria Strydom
  • Hue Hwa Au Yong
  • Michaela Rankin

Abstract

This article examines the relation between gender diversity and earnings quality for Australian firms from 2005 to 2013. We draw on the work of Kanter, highlighting the importance of the proportion of women on the board when measuring diversity. We show that all-male and skewed boards have lower earnings quality while that of tilted and balanced boards is higher. In addition, a critical mass of women is achieved when some 30% of directors are females. Performance and risk do not influence the relation. We contribute by presenting evidence supporting critical mass theory. Furthermore, our work adds to the recent debate on whether the association between gender diversity and earnings quality is U-shaped, rather than linear. Our results have implications for regulation and practice. We identify the need for a critical mass of women, rather than tokens, to enhance earnings quality.

Suggested Citation

  • Maria Strydom & Hue Hwa Au Yong & Michaela Rankin, 2017. "A few good (wo)men? Gender diversity on Australian boards," Australian Journal of Management, Australian School of Business, vol. 42(3), pages 404-427, August.
  • Handle: RePEc:sae:ausman:v:42:y:2017:i:3:p:404-427
    DOI: 10.1177/0312896216657579
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    3. Truc (Peter) Do, 2023. "The impact of board ethnic diversity on executive pay‐to‐performance sensitivity: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3643-3674, September.
    4. María José Ibáñez & Felipe Vásquez Lavin & Roberto D. Ponce Oliva, 2023. "Female Underperformance Hypothesis Revisited: Methodological Review and Empirical Testing," SAGE Open, , vol. 13(4), pages 21582440231, December.
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    6. Olga Dodd & Bowen Zheng, 2022. "Does Board Cultural Diversity Contributed by Foreign Directors Improve Firm Performance? Evidence from Australia," JRFM, MDPI, vol. 15(8), pages 1-23, July.
    7. Mather, Paul & Ranasinghe, Dinithi & Unda, Luisa A., 2021. "Are gender diverse boards more cautious? The impact of board gender diversity on sentiment in earnings press releases," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(3).
    8. Rakesh Pandey & Pallab Kumar Biswas & Muhammad Jahangir Ali & Mansi Mansi, 2020. "Female directors on the board and cost of debt: evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(4), pages 4031-4060, December.
    9. Pornsit Jiraporn & Pandej Chintrakarn & Shenghui Tong & Sirimon Treepongkaruna, 2018. "Does board independence substitute for external audit quality? Evidence from an exogenous regulatory shock," Australian Journal of Management, Australian School of Business, vol. 43(1), pages 27-41, February.
    10. Nguyen, Thi Hong Hanh & Ntim, Collins G. & Malagila, John K., 2020. "Women on corporate boards and corporate financial and non-financial performance: A systematic literature review and future research agenda," International Review of Financial Analysis, Elsevier, vol. 71(C).
    11. Nattapong Laksomya & John G. Powell & Suparatana Tanthanongsakkun & Sirimon Treepongkaruna, 2018. "Are Internet message boards used to facilitate stock price manipulation? Evidence from an emerging market, Thailand," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 275-309, November.
    12. Harakeh, Mostafa & Leventis, Stergios & El Masri, Tarek & Tsileponis, Nikolaos, 2023. "The moderating role of board gender diversity on the relationship between firm opacity and stock returns," The British Accounting Review, Elsevier, vol. 55(4).
    13. John Nowland & Andreas Simon, 2018. "Is poor director attendance contagious?," Australian Journal of Management, Australian School of Business, vol. 43(1), pages 42-64, February.
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    15. Stewart Jones & Nurul Alam, 2019. "A machine learning analysis of citation impact among selected Pacific Basin journals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2509-2552, December.

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    More about this item

    Keywords

    Critical mass; earnings quality; firm performance; gender diversity;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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