The Monitoring Role of Female Directors Over Accounting Quality

48 Pages Posted: 16 Feb 2016 Last revised: 30 May 2017

See all articles by Juan M. García Lara

Juan M. García Lara

Universidad Carlos III de Madrid - Department of Business Administration

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration

Araceli Mora

University of Valencia - Department of Accounting

Mariano Scapin

University of Bristol - School of Economics, Finance and Management

Date Written: May 1, 2017

Abstract

Recent research in accounting suggests female directors exert more stringent monitoring over the financial reporting process than their male counterparts. However, an emerging literature in finance and economics provides mixed findings and questions whether females in leadership roles significantly differ from their male counterparts. Building on this literature, we re-examine the link between the presence of female directors, gender biases, and financial statements quality. Using a large sample of UK firms we find that a larger percentage of women among independent directors is significantly associated with lower earnings management practices. However, we show that this relation disappears if we focus on firms that do not discriminate against women in the access to directorships. Finally, we provide evidence that gender biases are associated with lower earnings quality. We interpret our results as consistent with (1) prior evidence that males and females do not differ substantially when performing the same role in highly specialized positions, and with (2) discrimination being an important factor explaining the association between female directors and accounting quality.

Keywords: Gender, board of directors, accounting quality, earnings management, corporate governance

JEL Classification: M41, G34, J16, J71

Suggested Citation

García Lara, Juan Manuel and Garcia Osma, Beatriz and Mora, Araceli and Scapin, Mariano, The Monitoring Role of Female Directors Over Accounting Quality (May 1, 2017). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2732588 or http://dx.doi.org/10.2139/ssrn.2732588

Juan Manuel García Lara

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Beatriz Garcia Osma

Universidad Carlos III de Madrid - Department of Business Administration ( email )

Calle Madrid 126
Getafe, Madrid, Madrid 28903
Spain

Araceli Mora (Contact Author)

University of Valencia - Department of Accounting ( email )

Edificio Departamental Oriental
Avda. dels Tarongers, s/n
Valencia 46071
Spain

Mariano Scapin

University of Bristol - School of Economics, Finance and Management ( email )

The Priory Road Complex
Priory Road
Clifton, BS8 1TU
United Kingdom

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