Board of Director Gender Diversity and Its Impact on Earnings Management: An Empirical Analysis for Selected European Firms

30 Pages Posted: 4 Jun 2018 Last revised: 30 Jul 2018

See all articles by Paolo Saona

Paolo Saona

Saint Louis University

Laura Muro

St. Louis University - Madrid

Pablo San Martín

Universidad Catolica de la Santisima Concepcion

Date Written: June 4, 2018

Abstract

From a corporate governance point of view, this paper addresses the question about how board gender diversity influences managerial opportunistic behavior in solving agency conflicts in a sample of European countries. Specifically, we analyzed indexed non-financial companies from Denmark, Finland, France, Germany, Italy, Norway, Portugal, Spain, Sweden, and United Kingdom for the period 2006 – 2016. Several panel data techniques are used in the empirical analysis to deal with the endogeneity and heterogeneity problems. To the best of our knowledge our research is novel in the literature by providing a multi-country approach in board gender diversity, as well as considering contextual, country variables and the role of the regulatory system as determinants of earnings management.

Our results confirm the benefits of having a balanced board, in terms of gender diversity. An equilibrated board tends to mitigate earnings management practices, reinforcing the value of the laws passed in the last decades in Europe. Our analysis reveals that the regulatory framework regarding board gender diversity established by each country has a determinant role in reaching equality in decision-making positions, as a founding value of the European Union. We provide several policy recommendations from our main findings.

Keywords: Earnings management, Corporate Governance, Gender Diversity, Board Composition, Female Quotas

JEL Classification: G32, G34

Suggested Citation

Saona, Paolo and Muro, Laura and San Martín, Pablo, Board of Director Gender Diversity and Its Impact on Earnings Management: An Empirical Analysis for Selected European Firms (June 4, 2018). 31st Australasian Finance and Banking Conference 2018, Available at SSRN: https://ssrn.com/abstract=3190506 or http://dx.doi.org/10.2139/ssrn.3190506

Paolo Saona

Saint Louis University ( email )

Avidena del Valle, 34 y 28
Madrid, 28003
Spain
620364817 (Phone)

Laura Muro (Contact Author)

St. Louis University - Madrid ( email )

Avenida del Valle 34
Madrid, 28003
Spain

Pablo San Martín

Universidad Catolica de la Santisima Concepcion ( email )

Alonso de Ribera 2850
Concepción, Concepción 4070129
Chile

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