Board gender diversity and earnings management: what difference does gender quota legislation make in emerging market?
Journal of Financial Reporting and Accounting
ISSN: 1985-2517
Article publication date: 25 August 2023
Abstract
Purpose
This paper aims to examine the impact of board gender diversity (BOGD) following the adoption of gender quota legislation on earnings management (EM) in an emerging market, Egypt, whose cultural and economic conditions and institutional context are unlike most previously studied countries’ context.
Design/methodology/approach
The authors use ordinary least squares (OLS) regression to estimate the impact of gender quota legislation on EM using data from listed companies in Egypt from 2015 to 2022. Difference-in-difference (DID) approach estimation was used to validate the robustness of the main results.
Findings
This paper documents that gender diversity on boards has a significantly negative impact on EM. In addition, this paper provides robust evidence using the DID approach to show that BOGD is significantly negatively linked with EM for the period following gender quota legislation. Furthermore, the results support the critical mass and agency theories.
Practical implications
The findings of this study have important implications for Egyptian companies, regulatory bodies and investors in emerging markets. Specifically, these results suggest that when choosing board members, enterprises should pay particular attention to BOGD, and female involvement in all listed firms should be monitored by regulators.
Social implications
This paper provides evidence supporting the positive contribution of women in society by enhancing the economic performance of Egyptian firms and promoting the country’s sustainable development strategy in light of Egypt vision 2030.
Originality/value
As per the authors' knowledge, this empirical study is unique in investigating the impact of BOGD quota regulation on EM in Egypt. This paper contributes to BOGD as a major factor in improving financial reporting quality in Egyptian companies.
Keywords
Acknowledgements
The authors would like to thank the editor and anonymous reviewers for their helpful comments, suggestions and guidance on the article.
Disclosure statement: No potential conflict of interest was reported by the authors.
Citation
Anwar Abdelghaffar Saleh, M., Wu, D., Emad Areef Alhaleh, S., Effah, N.A.A. and Tawab Abdelrahman Sayed, A. (2023), "Board gender diversity and earnings management: what difference does gender quota legislation make in emerging market?", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-07-2023-0359
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited