Gender Diversity and Earnings Management

Abstract

This study explores the relationship between gender diversity and the level of earnings management practices among the UK listed firms. The investigation is conducted using the panel regression analysis. The period of analysis spans through 2009-2020. The outcomes of the study evidence that there is no statistically significant relationship between the presence of women on the board and the level of earnings management. Among other board features, the presence of foreign directors is associated with lower level of earnings management whereas greater age diversity of directors positively contributes to earnings manipulation. In addition, higher financial leverage is connected with lower earnings management proving that debt financing can be used as a control mechanism in firms. The linkage between revenue growth and earnings management is, on the contrary, positive suggesting that faster growing companies are more likely to engage in earnings management.