Gender Diversity and Securities Fraud
Academy of Management Journal, Forthcoming
46 Pages Posted: 11 Feb 2015 Last revised: 13 Feb 2015
Date Written: February 2, 2015
We formulate theory on the effect of board of director gender diversity on the broad spectrum of securities fraud and generate three main insights. First, based on ethicality, risk aversion, and diversity, we hypothesize that gender diversity on boards can operate as a significant moderator for the frequency of fraud. Second, we hypothesize that the stock market response to fraud from a more gender-diverse board is significantly less pronounced. Third, we hypothesize that women are more effective in male-dominated industries in reducing both the frequency and severity of fraud. Our first-ever empirical tests, based on data from a large sample of Chinese firms that committed securities fraud, are largely consistent with each of these hypotheses.
Keywords: corporate governance, ethical sensitivity, fraud, gender diversity, risk aversion
JEL Classification: G3, J16, K22
Suggested Citation: Suggested Citation