The relationship between earnings management and integrated reporting quality: Board gender diversity as moderator

Abstract

This study focuses on the relationship between earnings management and materiality disclosure quality in integrated reporting (IRQ) in an international setting. Moreover, board gender diversity as a moderator variable will be included. A cross-country sample consisting of 696 firm-year observations between 2014 and 2019 is included in this empirical-quantitative study. Correlation and regression analyses are conducted in order to focus on the impact of both accruals-based earnings management (AEM) and real earnings management (REM) on IRQ and the moderating impact of board gender diversity (Blau index). Both AEM and REM are negatively related to IRQ and board gender diversity weakens this relationship. A bidirectional link between earnings management and IRQ is not stated. While prior research did not find significant impacts of accruals attributes on IRQ, our analysis makes a key contribution as the link between AEM, REM, and IRQ is both analysed and stated for the first time. Corporate practice, regulators and researchers should be aware of the notion that earnings quality and integrated reporting quality have many interdependencies and should be discussed together