Substitutes or complements? The role of the board in moderating the relationship between board diversity and earnings management

Previous research studies have used multiple theories, such as resource dependence, human capital, social capital, busyness, signalling, behavioural, and agency theories in order to investigate the association between board diversity and earnings management and the association between board diversity and firm performance. This chapter surveys 75 research studies and used 37 theories. Most of the studies focused on agency and resource dependent theories. Also, this study used social capital theory as a contribution of the chapter, which was rarely used and which examined the relationship between board diversity and earnings management in addition to firm performance.

PurposeThis paper aims to investigate the moderating effect of sustainability reporting on the relationship between the independent variables of board diversity, and earnings management and the dependent variable of readability of financial statements.Design/methodology/approachThe study panel data regression analysis involved 36 Kenyan-listed companies from 2016 to 2020.FindingsKey findings were that increased board diversity was found to significantly improve the readability of financial statements. Discretionary earnings management was found to significantly reduce the readability of financial statements. Sustainability reporting was found to significantly increase the readability of financial statements, and it moderated the relationship between board diversity, earnings management and financial statements readability in Kenya.Research limitations/implicationsThe study sample of 36 non-financial listed in the Nairobi Securities Exchange was very small and was affected by the problem of thin trading; hence, caution should be adopted when interpreting the findings.Practical implicationsThe Capital Markets Authorities (CMA) as a policymaker should enforce sustainability reporting by Kenyan listed firms as there is evidence that the reporting enhances the readability of financial statements. The Institute of Certified Public Accountants as a policymaker should closely monitor the published financial statements of firms for earnings management and punish the perpetrators, as there is empirical evidence that the practice reduces the readability of financial statements.Social implicationsSustainability reporting is successful as a moderating variable between readability of financial statements and determinants of readability of financial statements.Originality/valueThis study contributes to knowledge by studying sustainability reporting as a moderating variable between the independent variables of board diversity and earnings management and the dependent variable of readability of financial statements and measured sustainability reporting using a dummy variable for the period before and after the enactment and release of CMA code of 2016 on corporate governance that required sustainability reporting by Kenyan listed companies.

Purpose: The increasing need for improved quality of financial reporting is becoming a key challenge for stakeholders in the Nigerian corporate setting because of the consistent failure being witness by many organization. The presence of loan loss provision in the banking sector has paved way for managers to manipulate accounting earnings which has compel the need for this research in order to examine factors that could help mitigate or curtail managers’ tendencies to engage in earnings manipulation. Therefore, the study examine the effect of board diversity and audit committee on earnings management of listed Deposit Money Banks in Nigeria. Methodology: Board diversity variables include women director, board ownership, foreign director, board size and board composition, while a composite index of audit committee size, composition and meeting was used to moderate two (women director and board ownership) of the board diversity variables. Earnings Management was represented by Chang, Shen and Fang (2008) model. The population consists of fifteen (15) banks and all were used for the analysis. Secondary data were collected from the annual reports and accounts of the banks for the period 2008-2015. Multiple regression technique was adopted and Stata 13 was used as the tool of data analysis. Findings: The findings revealed that, all the variables before moderation have significant effect on earnings management of banks except for board size. Meanwhile, after moderation, the findings revealed that explanatory variables explained the extent of earnings management better than before moderation. However, among all the explanatory variable used during the moderation, it was only three variables (foreign director, board composition and audit committee) that have significant effect on earnings management. Practical Implications: Based on the above findings, the study recommended amongst others that the percentage of women director, shares held by directors and number foreign director should be increased, while the number of non-executive directors and audit committee should also be improved upon in order to mitigate the tendencies for earnings management in banks. Originality: The use of audit committee as moderating variable and the test of applicability and the usefulness of Chang, Shen and Fang (2008) model in Nigerian Banking Sector.

This study examined the effect of board diversity, audit committee and earnings management of oil and gas (o&g) companies listed in Nigeria stock exchange. Female directors and foreign directors served as proxies for board diversity, audit committee independence and meeting frequency were moderating variables to study possible discretionary accruals in earnings. Eleven o&g companies in Nigeria that were listed that had consistently produced audited yearly financial reports from 2009 to 2019 were employed to accomplish the study's goals. Regression models with fixed and random effects were utilised in the investigation. The outcome showed that earnings management and the board diversity of listed o&g companies in Nigeria was moderated by the audit committee. The findings suggested that Nigerian-listed oil and gas businesses should give a gender quota for female directors. It is advised that regulators consider the number of meetings that audit committees hold, as it is the members' intelligence to comprehend the financial ramifications of management decisions rather than meeting frequency that determines the monitoring of managers' opportunistic attitudes.

This study examines the relationship between Environmental, Social, and Governance (ESG) practices and earnings management, considering firm risk and board gender diversity as moderating variables. The phenomenon arises because ESG adoption in Indonesia has skyrocketed, yet its integration into risk management remains questionable. Earnings management is also widely practiced, but its impact on market perceptions of risk remains unclear. Board diversity is often promoted as a governance mechanism, but remains limited in emerging markets. The research utilizes secondary data from 194 non-financial firms listed on the Indonesia Stock Exchange as of 2023. Hypotheses are tested using multiple regression with robust standard errors. The results indicate that ESG and earnings management do not have a significant impact on firm risk, and board gender diversity does not moderate these relationships. These findings indicate that ESG disclosures remain symbolic, earnings management is not perceived as a risk signal, and board diversity has yet to provide adequate oversight. The study suggests the need for more rigorous ESG enforcement, better integration into corporate strategy, and increased female representation on boards.

This study looked at how board diversity affected Nigerian listed oil and gas companies' management of earnings. Female and international directors served as proxies for the study's independent variable (board diversity), while the dependent variable (earnings management) was represented by the discretionary accruals of Nigerian listed oil and gas businesses. Eleven (11) listed Nigerian oil and gas businesses that had consistently produced audited yearly financial reports from 2009 to 2019 were employed to accomplish the study's goals. Regression models with fixed and random effects were utilized in the investigation. The outcome showed that the management of earnings of listed oil and gas firms in Nigeria is negatively and significantly impacted by female directors and international directors. According to the findings, the study suggests that Nigerian listed businesses should give a gender quota for female directors.

This paper aims to examine the consequences of board diversity. The objectives are to measure the impact of gender, age, national diversity on earnings management (EM). This research study raises the following questions: Does board diversity affect earnings management and firm performance? Has the 2013 Kuwait Corporate Governance Code impacted on board diversity on earnings management, beside firm performance? The research uses data from 103 non-financial Kuwaiti listed companies in the period from 2010 to 2017. The data is collected from the companies’ data from secondary sources such as their annual reports. The data analysis methods are correlation, multi-regression and robust regression. Earnings management was measured using the model modified by Jones (1995) and Kothari et al. (2005). Firm performance measured by ROA, ROE, Tobin’s Q and total shareholder return. The independent variables are gender diversity, age diversity, nationality diversity, board size, board independent and role duality. Control variables are firm size, industry type, total debt, total revenue, oil price, percentage change oil price, gold price, the percentage change of gold price and, ROA

CEO Characteristics and Timeliness of Financial Reporting of Vietnamese Listed Companies

The purpose of this paper is to provide a critical review of the existing studies in the literature related to the board diversity aspects and its association with earnings management practices. In general, there are inconsistent findings regarding whether demographic diversity at corporate boards can influence different earnings management practices. Besides, previous studies focused on accrual-based earnings management method and there is a need to include other earnings management methods. The proportion of the minority group on boards should also be taken into consideration when testing the board diversity. The current study contributes to the literature by addressing different future research topics.

ABSENT fiat, the form of organization that survives in an activity is the one that delivers the product demanded by customers at the lowest price while covering costs.1 Our goal is to explain the survival of organizations characterized by separation of "ownership" and "control"-a problem that has bothered students of corporations from Adam Smith to Berle and Means and Jensen and Meckling.2 In more precise language, we are concerned with the survival of organizations in which important decision agents do not bear a substantial share of the wealth effects of their decisions. We argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. We contend that separation of decision and risk-bearing functions survives in these organizations in part because of the benefits of specialization of

This study examines the effect of Carbon Emissions Disclosure and Board Diversity on Earnings Management, with Other Comprehensive Income Disclosure as a moderating variable. The sample consists of 51 energy companies listed on the Indonesia Stock Exchange for the 2021–2023 period, selected using purposive sampling. Data were obtained from financial statements, annual reports, and sustainability reports. The results show that Carbon Emissions Disclosure has a negative and significant effect on Earnings Management, Board Gender Diversity does not have a negative effect on Earnings Management, Board Nationality Diversity has a negative but insignificant effect on Earnings Management, and Other Comprehensive Income Disclosure has a positive and significant effect on Earnings Management. Furthermore, Other Comprehensive Income Disclosure strengthens the negative effect of Carbon Emissions Disclosure on Earnings Management and weakens the negative effect of Board Gender Diversity and Board Nationality Diversity on Earnings Management.

Research background: Diversity management is one of the hot topic issues present in current public discussions. Board diversity requirements are quite new for Polish public companies. The companies listed on the Warsaw Stock Exchange have to publish a statement on the company's compliance with the corporate governance recommendations and principles included in ?Best Practice for GPW Listed Companies 2016?. This regulation is based on the 'comply or explain? principle, thus the company may decide whether to comply with every rule included in the code, but decision on not implementing one or more rules should be explained by the company. Some of the recommended rules regard the board (supervisory and management) diversity policy implementation, where diversity refers to such dimensions as gender, education, age and professional experience. Purpose of the article: This study aims to investigate determinants of board diversity policy implementation by domestic companies listed on the WSE. It also documents explanations provided by companies that do not apply board diversity policy. Methods: The research sample covers 268 non-financial domestic companies listed on the Warsaw Stock Exchange between 2016 and 30 November 2018. The companies? current reports on company compliance with the corporate governance codes and information issued on companies? websites were analyzed in order to identify those that announced implementation of board diversity policy. This study uses logistic regression analysis to identify the firm-level characteristics that may influence the implementation of board diversity policy. Findings & value added: This is the first study analyzing the drivers of board diversity policy implementation by Polish companies listed on the WSE. It shows that large companies, companies with larger management boards and companies with women acting as presidents of the supervisory boards are more likely to take actions seeking to achieve management and supervisory board diversity.

PurposeThis paper aims to shed light on an essential role that “female directors” on boards of companies in sub-Saharan Africa play towards corporate financial performance enhancement. The study observes how board gender diversity moderates the relationship between earnings management (EM) and financial performance of firms in sub-Saharan Africa from a dynamic perspective.Design/methodology/approachThe study’s sample comprises 105 companies listed on the respective stock markets of nine sub-Saharan African countries. The data are collected from annual reports over the period 2007–2019, a total of 1,166 firm-year observations. Panel data models are used in the analyses.FindingsThe study finds that the performance effect of EM is contingent on board diversity and this finding persists even after controlling for dynamic endogeneity, simultaneity and unobserved time-invariant heterogeneity inherent in the EM and performance relationship.Research limitations/implicationsThe findings should be understood within the context that, only available annual reports and audited financial statements that were filed with respective capital markets of the nine surveyed countries are used as source of information.Originality/valueThe current study is unique, in that, it is the first panel multi-cross-country investigation within Africa to introduce gender diversity in the study of the relationship between EM and firm performance. It therefore extends the agency theory by using gender diversity as a moderating variable in the EM–firm performance nexus.

The core principle of corporate governance in Nigeria is how to make those in the management of the companies more accountable, responsible and sensitive to the interest of shareholders, creditors and members of the public. The issue of board diversity as drivers of effective corporate governance has continued to be a subject of debate among professionals, practitioners and players in commerce. Therefore, this study examined the effect of board diversity attributes on earnings management of listed consumer goods manufacturing companies in Nigeria. The study adopts expost facto research design whereby data was sourced mainly from the audited annual financial reports of selected consumer goods manufacturing firms on the Nigerian Exchange Group for the period 2004-2022. The population of the study consists of twenty one (21) consumer goods manufacturing firms in Nigeria as at 2024. The sample size of ten (10) consumer goods manufacturing firms in Nigeria was arrived at using purposive sampling technique whereby consumer goods manufacturing firms which have their annual report and accounts readily accessible for the study period were selected. Analytical techniques used in the study consist of both descriptive and inferential statistics. Descriptive statistics employed include minimum, maximum, mean and standard deviation while Panel regression analysis was used to test the study objective. Panel regression analysis was used to examine the effect of board diversity attributes on earnings management. Findings from the result of panel regression analysis on the effect of board diversity attributes on earnings management of listed consumer goods manufacturing companies in Nigeria showed that two out of the five (5) explanatory variables was significant in explaining the variation of earnings management. These variables are CEOduality (p=0.0400) and Female Director (p=0.0317), Based on the findings, the study therefore concluded that there is relationship between corporate board diversity and earnings management of listed consumer goods manufacturing firms in Nigeria The study recommend that board should comprise individuals with varied expertise in finance, law, marketing, and operations to address a wide range of issues and enhance decision-making processes.

The importance of diversity within corporate boards has been demonstrated both from the literature and also from the national and international regulation. The aim of this paper is to analyse the impact of diversity on the Board of Directors and in the Board of Statutory Auditor on Earnings Management behaviour. Starting with a random sample of 121 non-financial Italian listed companies, we hand-collected corporate governance data from the corporate governance report to investigate how firms deal with the opportunistic behaviour of EM, through the appointment of members with specific features. Our findings show that, even though diversity within the Board of Directors is not associated with Earnings Management, the presence of female and member expertise on Board of Statutory Auditor instead curb Earnings Management. Based on these findings we argue that pursuing a good degree of diversity in the corporate boards could help to improve the earnings quality and, in particular, to reduce Earnings Management behaviour.