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The Effects and the Mechanisms of Board Gender Diversity: Evidence from Financial Manipulation

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  • Aida Sijamic Wahid

    (University of Toronto)

Abstract

This study examines the impact of board gender diversity on financial misconduct. The findings suggest firms with gender-diverse boards commit fewer financial reporting mistakes and engage in less fraud. The findings hold after accounting for the potentially endogenous nature of board demographic characteristics via instrumental variable approach. Furthermore, the findings are consistent in pre- and post-regulation (Sarbanes–Oxley) periods and hold for firms with good and bad governance. The findings do not seem driven by differences in effort or quality, in terms of independence and expertise, of female and male directors. The benefit derived from increasing the number of female directors on corporate boards seems to diminish at higher levels of gender diversity, indicating that impact of gender diversity on decreasing the likelihood of financial misconduct may be a result of a change to board group dynamics.

Suggested Citation

  • Aida Sijamic Wahid, 2019. "The Effects and the Mechanisms of Board Gender Diversity: Evidence from Financial Manipulation," Journal of Business Ethics, Springer, vol. 159(3), pages 705-725, October.
    • Handle: RePEc:kap:jbuset:v:159:y:2019:i:3:d:10.1007_s10551-018-3785-6
    DOI: 10.1007/s10551-018-3785-6
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    More about this item

    Keywords

    Corporate governance; Board of directors; Gender; Board composition; Board diversity; Accounting quality; Restatement;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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