Role of Board Gender Diversity in Facilitating or Mitigating Fraud: A Research Review

Abstract

This study reviewed previous research articles (28 studies) in the last 10 years on the role of board gender diversity on the perpetuation or mitigation of fraud in corporations. The popular grand theory, the Agency Theory of DeAngelo was used as the framework for the study in conjunction with the framework developed by (Jain and Jamali, 2016) on corporate governance. The main finding of the study was that out of the 4 levels he proposed, most of the reviewed studies identified with only 3 levels, namely group; individual and firm excluding the institutional level. The other finding of this study was that gender diversity or presence of women on board facilitated fraud deterrence at all levels, gender diversity was also observed to influence cybersecurity disclosure even though it has no bearing on the strength of the internal control. Several factors capable of influencing these relationships were recommended by the reviewed articles, part of which are political connections; board meeting frequency; establishment of specific law enforcement agencies and laws; a shift in board group dynamics; a mix of directors with industrial and accounting/finance experience, and independent directors among others. The findings suggest that promoting gender diversity on boards is crucial for improving management choices and audit quality. Female directors’ presence can reduce fraud occurrence and mitigate it, and as fraud continues to grow, new solutions are needed to ensure financial reporting quality. Reconsidering stereotypes and addressing the importance of female directors’ presence on boards is essential.