The Effects of Board Independence, Board Diversity and Corporate Social Responsibility on Earnings Management

Abstract

This study extends earlier research on corporate governance by examining whether the interaction between independent directors, women directors, minority directors and corporate social responsibility practices is effective to mitigate earnings management. Using panel data from Malaysian firms for the financial years 2005-07, this study finds that only minority director has main effect on earnings management. This result suggests that firms which have board diversity tend to have lower earnings management. There is no interaction effect between corporate social responsibility and corporate governance variables on earnings management.

Keywords: earnings management, independent director, board diversity, corporate social responsibility, Malaysia