Female directors and earnings management: Evidence from UK companies

Abstract

Since the gender diversity of boards and the reporting of earnings are two of the most debated issues in the corporate world, the paper examines how the presence of women directors on the corporate board influences earnings management practices. We found that firms with a higher number of female and independent female directors are adopting restrained earnings management practices in the UK. We further made a distinction between high- and low-debt firms, and the outcomes reveal that female directors have a positive effect on the earnings management in low debt firms. The paper contributes to the debate on gender diversity on boards, and its impact on the use of accounting discretion in financial reporting.