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Women directors, family ownership and earnings management in Malaysia

Author

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  • Shamsul Nahar Abdullah
  • Ku Nor Izah Ku Ismail

Abstract

Purpose - The purpose of this paper is to determine whether the representation of women on the boards (WOMBDs) and audit committees is associated with a reduction in the practice of earnings management and whether women are associated with income reducing (conservative) rather than income-increasing (aggressive) earnings management. The authors further argue that family ownership moderates the relationship between the presence of WOMBDs and audit committees and earnings management. Design/methodology/approach - The study uses non-finance firms listed on Bursa Malaysia over a period of four years, i.e. from 2008 until 2011. Findings - The evidence reveals that the presence of WOMBD or audit committee is not associated with a propensity for earnings management. In addition, the evidence also reveals that family ownership does not interact either with WOMBD or with women on the audit committee (WOMAC) to influence the propensity for earnings management. Nevertheless, the additional analyses show that, while women on boards are not associated with income-decreasing accruals, the presence of women on audit committees leads to income-reducing earnings management. The evidence further reveals that family ownership does not interact with either WOMBD or WOMAC to influence income-decreasing earnings management. Originality/value - This study extends prior research on the role of women directors and women audit committee members on earnings management focussing on family ownership. Further, the study also examines the direction of earnings management as opposed to the most prior studies, which mainly focus on the propensity of earnings management.

Suggested Citation

  • Shamsul Nahar Abdullah & Ku Nor Izah Ku Ismail, 2016. "Women directors, family ownership and earnings management in Malaysia," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 24(4), pages 525-550, December.
    • Handle: RePEc:eme:arapps:ara-07-2015-0067
    DOI: 10.1108/ARA-07-2015-0067
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    Citations

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    Cited by:

    1. Mujeeb Saif Mohsen Al-Absy, 2022. "Board Chairman Characteristics and Real Earnings Management," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    2. Chauhan, Yogesh & Dey, Dipanjan Kumar, 2017. "Do female directors really add value in Indian firms?," Journal of Multinational Financial Management, Elsevier, vol. 42, pages 24-36.
    3. Hafezali Iqbal Hussain & Azlan Ali & Hassanudin Mohd Thas Thaker & Mohsin Ali, 2019. "Firm Performance and Family Related Directors: Empirical Evidence from an Emerging Market," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 13(2), June.
    4. Amin, Qazi Awais & Cumming, Douglas, 2021. "Blockholders and real earnings management-the emerging markets context," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    5. Abdul Wahab, Nor Shaipah & Ntim, Collins G. & Tye, Wei Ling & Shakil, Mohammad Hassan, 2022. "Book-tax differences and risk: Does shareholder activism matter?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 48(C).
    6. Mujeeb Saif Mohsen Al-Absy & Ku Nor Izah Ku Ismail & Sitraselvi Chandren, 2018. "Accounting expertise in the audit committee and earnings management," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 451-476, June.
    7. Mujeeb Saif Mohsen Al-Absy & Ku Nor Izah Ku Ismail & Sitraselvi Chandren, 2019. "Corporate Governance Mechanisms, Whistle-Blowing Policy and Real Earnings Management," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(6), pages 265-282, October.
    8. Lonkani, Ravi, 2019. "Gender differences and managerial earnings forecast bias: Are female executives less overconfident than male executives?," Emerging Markets Review, Elsevier, vol. 38(C), pages 18-34.
    9. Belal Ali Ghaleb & Sumaia Ayesh Qaderi & Adel Ali Al‐Qadasi, 2024. "Independent female directors and integrated reporting quality: The moderating role of family ownership," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3429-3443, July.

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