Women on Board on Companies Performances and Fraud Tendencies: Evidence from Indonesia’s Energy Industry

Agoestina Mappadang; Winnie Bernadine

doi:10.22219/jaa.v7i2.32785

Authors

Agoestina Mappadang Fakultas Ekonomi dan Bisnis, Universitas Budi Luhur, Jakarta, Indonesia
Winnie Bernadine Fakultas Ekonomi dan Bisnis, Universitas Budi Luhur, Jakarta, Indonesia

DOI:

https://doi.org/10.22219/jaa.v7i2.32785

Keywords:

Fraud, Kinerja Perusahaan, Kinerja Saham, Manipulasi Laporan Keuangan, Women on Board

Abstract

Purpose: This research examines how the presence of women on company boards affects financial performance, stock performance, and the detection of financial statement manipulation.

Methodology/approach: Using a purposive sample method of data from 54 energy sector companies listed on the Indonesia Stock Exchange from 2018 to 2022, this research exerts panel regression analysis using EViews 9.

Findings: The research results show that a female board of commissioners has a significant impact on financial performance and detection of financial report manipulation, but not stock performance. In addition, financial performance variables can mediate the relationship between women on board and detection of financial statement manipulation.

Practical and Theoretical contribution/Originality: Previous research has largely been limited to exploring the correlation between gender diversity and firm performance, as well as manipulation, separately.

Research Limitation: The sector is affected by global economic trends and natural factors, causing inefficiencies in the capital market and investor reactions to internal company data.

Downloads

Download data is not yet available.

References

Aljawaheri, Abdul Wahhab, B., Kadhem Ojah, H., Hussein Machi, A., & Hamza Almagtome, A. (2021). COVID-19 Lockdown, Earnings Manipulation and Stock Market Sensitivity: An Empirical Study in Iraq. Hamza ALMAGTOME / Journal of Asian Finance, 8(5), 707–0715.

Abdullah, Prof. M. (2015). Metodologi Penelitian Kuantitatif. In Aswaja Pressindo.

Abriatika, F. N., & Mutmainah, S. (2022). Faktor yang Mempengaruhi Kecurangan Laporan Keuangan di Badan Usaha Milik Negara Indonesia. E-Jurnal Akuntansi, 32(12), 3567. https://doi.org/10.24843/eja.2022.v32.i12.p07

ACFE. (2022). Occupational Fraud 2022: A Report to the nations. Association of Certified Fraud Examiners.

ACFE Indonesia. (2020). Survei Fraud Indonesia 2019. Indonesia Chapter #111, 53(9).

Adams, R. B., & Ferreira, D. (2009a). Strong managers, weak boards? CESifo Economic Studies, 55(3–4). https://doi.org/10.1093/cesifo/ifp023

Adams, R. B., & Ferreira, D. (2009b). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291–309. https://doi.org/10.1016/j.jfineco.2008.10.007

Basuki, Agus Tri and Prawoto, Nano. 2016. (2016). Analisis Regresi Dalam Penelitian Ekonomi & Bisnis : Dilengkapi Aplikasi SPSS & EVIEWS. Depok : PT Rajagrafindo Persada. Journal of Chemical Information and Modeling, 53(9).

Baum, I., Gafni, D., & Lazar, R. (2022). Gender and Corporate Crime: Do Women on the Board of Directors Reduce Corporate Bad Behavior? Michigan Journal of Gender & Law, 29.2, 291. https://doi.org/10.36641/mjgl.29.2.gender

Beneish, M. D. (1999). The Detection of Earnings Manipulation. Financial Analysts Journal, 55(5). https://doi.org/10.2469/faj.v55.n5.2296

Bennouri, M., Chtioui, T., Nagati, H., & Nekhili, M. (2018). Female board directorship and firm performance: What really matters? Journal of Banking and Finance, 88. https://doi.org/10.1016/j.jbankfin.2017.12.010

Bernardi, R. A. (2010). Women Directors and Corporate Social Responsibility. Electronic Journal of Business Ethics and Organization Studies Women, 15(2).

Bhutto, N. A., Shaique, M., Kanwal, S., Matlani, A., & Zahid, H. (2021). Impact of Earnings Management Practices on Stock Return. Indonesian Capital Market Review, 13(1). https://doi.org/10.21002/icmr.v13i1.12839

Boukattaya, S., & Omri, A. (2021). Impact of board gender diversity on corporate social responsibility and irresponsibility: Empirical evidence from france. Sustainability (Switzerland), 13(9). https://doi.org/10.3390/su13094712

Briano-Turrent, G. del C. (2022). Female representation on boards and corporate ethical behavior in Latin American companies. Corporate Governance: An International Review, 30(1), 80–95. https://doi.org/10.1111/corg.12416

Brigham, E. R., & Houston, J. F. (2018). Dasar-dasar manajemen keuangan / Eugene F. Brigham, Joel F. Houston ; penerjemah, Novietha Indra Sallama, Febriany Kusumastuti ; supervisor editor, Masykur, M. | OPAC Perpustakaan Nasional RI. In 14.

Capezio, A., & Mavisakalyan, A. (2016). Women in the boardroom and fraud: Evidence from Australia. Australian Journal of Management, 41(4). https://doi.org/10.1177/0312896215579463

Carmo, C., Alves, S., & Quaresma, B. (2022). Women on Boards in Portuguese Listed Companies: Does Gender Diversity Influence Financial Performance? Sustainability (Switzerland), 14(10). https://doi.org/10.3390/su14106186

Casu, B., & Berinato, S. (2021). Banks with more women on their boards commit less fraud. In Harvard Business Review (Vol. 2021, Issue May-June). Harvard Business School Publishing.

Christy, Y. E., & Stephanus, D. S. (2018). Pendeteksian Kecurangan Laporan Keuangan dengan Beneish M-Score pada Perusahaan Perbankan Terbuka. Jurnal Akuntansi Bisnis, 16(2). https://doi.org/10.24167/jab.v16i2.1560

Cox, T. H., & Blake, S. (1991). Managing cultural diversity: implications for organizational competitiveness. Academy of Management Perspectives, 5(3). https://doi.org/10.5465/ame.1991.4274465

Cunha, D. R. D. S., De Moura, A. A. F., & Cruz, P. B. da. (2022). Impact of women and ethics committees on firms’ value and financial performance. International Journal of Human Resource Management, 33(20), 4034–4057. https://doi.org/10.1080/09585192.2021.2013923

Dang, R., & Vo, L. C. (2012). Women on corporate boards of directors: Theories, facts and analysis. In Board Directors and Corporate Social Responsibility. https://doi.org/10.1057/9780230389304

Francis, B. B., Hasan, I., Wu, Q., & Yan, M. (2014). Are female CFOS less tax aggressive? Evidence from tax aggressiveness. Journal of the American Taxation Association, 36(2). https://doi.org/10.2308/atax-50819

Galbreath, J. (2011). Are there gender-related influences on corporate sustainability? A study of women on boards of directors. Journal of Management and Organization, 17(1). https://doi.org/10.1017/s1833367200001693

Gallego-Álvarez, I., García-Sánchez, I. M., & Rodríguez-Dominguez, L. (2010). The influence of gender diversity on corporate performance. Revista de Contabilidad-Spanish Accounting Review, 13(1). https://doi.org/10.1016/S1138-4891(10)70012-1

Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25 Edisi 9. Semarang: Badan Penerbit Universitas Diponegoro. Variabel Pemoderasi. E-Jurnal Akuntansi Universitas Udayana, 23 (2)(1470).

Gonçalves, T. C., Gaio, C., & Rodrigues, M. (2022). The Impact of Women Power on Firm Value. Administrative Sciences, 12(3). https://doi.org/10.3390/admsci12030093

Gómez, Moreno, J., Lafuente, E., & Vaillant, Y. (2018). Gender diversity in the board, women’s leadership and business performance. Gender in Management, 33(2). https://doi.org/10.1108/GM-05-2017-0058

Guizani, M., & Abdalkrim, G. (2023). Does gender diversity on boards reduce the likelihood of financial distress? Evidence from Malaysia. Asia-Pacific Journal of Business Administration, 15(2). https://doi.org/10.1108/APJBA-06-2021-0277

Gujarati, D. (2014). Dasar-dasar Ekonometrika. In Dasar-dasar Ekonometrika.

Hall, J. A. (2010). Information Technology Auditing and Assurance. In Lecture Notes in Logistics.

Haron, N. H., Abdul Halim, N. A., & Alias, N. (2021a). The Relationship between Board Diversity, Board Independence and Corporate Fraud. ADVANCES IN BUSINESS RESEARCH INTERNATIONAL JOURNAL, 7(1), 33. https://doi.org/10.24191/abrij.v7i1.10108

Haron, N. H., Abdul Halim, N. A., & Alias, N. (2021b). The Relationship between Board Diversity, Board Independence and Corporate Fraud. ADVANCES IN BUSINESS RESEARCH INTERNATIONAL JOURNAL, 7(1), 33. https://doi.org/10.24191/abrij.v7i1.10108

Hoffman, L. R., & Maier, N. R. F. (1961). Quality and acceptance of problem solutions by members of homogeneous and heterogeneous groups. Journal of Abnormal and Social Psychology, 62(2). https://doi.org/10.1037/h0044025

Jagirani, T. S., Chee, L. C., & Kosim, Z. B. (2023). “Board characteristics and firm value: The moderating role of capital adequacy.” Investment Management and Financial Innovations, 20(2), 205–214. https://doi.org/10.21511/imfi.20(2).2023.18

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4). https://doi.org/10.1016/0304-405X(76)90026-X

Kasmir. (2018). Analisis laporan keuangan / Dr. Kasmir. In Perpustakaan Nasional RI (Vols. 978-979-769-216–2).

Khan, A. W., & Abdul Subhan, Q. (2019). Impact of board diversity and audit on firm performance. Cogent Business and Management, 6(1). https://doi.org/10.1080/23311975.2019.1611719

Khan, I., Khan, I., Khan, I. U., Suleman, S., & Ali, S. (2024). Board diversity on firm performance from resource-based view perspective: new evidence from Pakistan. International Journal of Productivity and Performance Management, 73(3). https://doi.org/10.1108/IJPPM-01-2022-0055

Khidmat, Bin. W., Ayub Khan, M., & Ullah, H. (2020). The Effect of Board Diversity on Firm Performance: Evidence from Chinese L isted Companies. Indian Journal of Corporate Governance, 13(1). https://doi.org/10.1177/0974686220923793

Kirsch, A. (2018). The gender composition of corporate boards: A review and research agenda. Leadership Quarterly, 29(2). https://doi.org/10.1016/j.leaqua.2017.06.001

Koshal, R. K., Yamada, Y., Miyazima, S., Kosha, M., & Gupta, A. K. (2004). Female workers in Japan: Opportunities & challenges. Journal of International Women’s Studies, 6(1).

Kuncoro, M. (2009). Metode Riset untuk Bisnis & Ekonomi, Edisi Ketiga. Jakarta: PT. Gelora Aksara Pratama.

Lau, Andy, A. L., & Serly. (2021). DETERMINAN MANIPULASI AKUNTANSI DI LAPORAN KEUANGAN DENGAN RASIO INVESTASI BERBASIS AKRUAL. Akurasi : Jurnal Studi Akuntansi Dan Keuangan, 4(2). https://doi.org/10.29303/akurasi.v4i2.110

Liao, J., Smith, D., & Liu, X. (2019). Female CFOs and accounting fraud: Evidence from China. Pacific Basin Finance Journal, 53, 449–463. https://doi.org/10.1016/j.pacfin.2019.01.003

Ligocká, M. (2020). Gender Diversity in Boardrooms and on Supervisory Boards and its Relation to Stock Prices. Scientific Annals of Economics and Business, 67(2), 177–192. https://doi.org/10.47743/SAEB-2020-0010

Linggih, A. D., & Wiksuana, I. G. B. (2018). The Effects of Gender Diversity in The Boardroom on Firm Financial Performance in Indonesia. Jurnal Ekonomi Kuantitatif Terapan. https://doi.org/10.24843/jekt.2018.v11.i02.p07

Loukil, N., Yousfi, O., & Yerbanga, R. (2019). Does gender diversity on boards influence stock market liquidity? Empirical evidence from the French market. Corporate Governance (Bingley), 19(4). https://doi.org/10.1108/CG-09-2018-0291

Low, D. C. M., Roberts, H., & Whiting, R. H. (2015). Board gender diversity and firm performance: Empirical evidence from Hong Kong, South Korea, Malaysia and Singapore. Pacific Basin Finance Journal, 35. https://doi.org/10.1016/j.pacfin.2015.02.008

Lückerath-Rovers, M. (2013). Women on boards and firm performance. Journal of Management and Governance, 17(2). https://doi.org/10.1007/s10997-011-9186-1

Luo, J. hui, Xiang, Y., & Huang, Z. (2017). Female directors and real activities manipulation: Evidence from China. China Journal of Accounting Research, 10(2). https://doi.org/10.1016/j.cjar.2016.12.004

Maghfirah, A., Maretha, D., & Prajawati, I. (2023). Pengaruh Diversitas Gender dan Ukuran Perusahaan Terhadap Nilai Perusahaan dengan Pemoderasi Modal Intelektual. IJIEB: Indonesian Journal of Islamic Economics and Business, 8(1), 133–147. http://e-journal.lp2m.uinjambi.ac.id/ojp/index.php/ijoieb

Malagila, J. K., Zalata, A. M., Ntim, C. G., & Elamer, A. A. (2021). Corporate governance and performance in sports organisations: The case of UK premier leagues. International Journal of Finance and Economics, 26(2). https://doi.org/10.1002/ijfe.1918

Mappadang, A. (2022). Motivation Of Fraud: Internal Control System, Organizational Justice, Compensation, And Information Asymmetry. Jurnal Akademi Akuntansi, 5(1). https://doi.org/10.22219/jaa.v5i1.19677

Maulidi, A. (2023). Gender board diversity and corporate fraud: empirical evidence from US companies. Journal of Financial Crime, 30(2), 309–331. https://doi.org/10.1108/JFC-02-2022-0038

McLeod, Lauretta, P., & Lobel, S. A. (1992). THE EFFECTS OF ETHNIC DIVERSITY ON IDEA GENERATION IN SMALL GROUPS. Academy of Management Proceedings, 1992(1). https://doi.org/10.5465/ambpp.1992.17515639

Messier, W. F., Glover, S. M., & Prawitt, D. F. (2008). Auditing & Assurance Services: A Systematic Approach. In Buku Satu Edisi 4.

Milliken, F. J., & Martins, L. L. (1996). Searching for common threads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21(2), 402–433. https://doi.org/10.5465/AMR.1996.9605060217

Napitupulu, R. B., Simanjuntak, T. P., Hutabarat, L., Damanik, H., Harianja, H., Sirait, R. T. M., & Tobing, C. E. R. L. (2021). Penelitian Bisnis : Teknik dan Analisa Data dengan SPSS - STATA - EVIEWS. In Madenatera (Vol. 1).

Ndofor, H. A., Wesley, C., & Priem, R. L. (2015). Providing CEOs With Opportunities to Cheat. Journal of Management, 41(6). https://doi.org/10.1177/0149206312471395

Nielsen, S., & Huse, M. (2010). Women directors’ contribution to board decision-making and strategic involvement: The role of equality perception. European Management Review, 7(1). https://doi.org/10.1057/emr.2009.27

Martínez, Valls, M. del C., Cruz Rambaud, S., & Parra Oller, I. M. (2019). Gender policies on board of directors and sustainable development. Corporate Social Responsibility and Environmental Management, 26(6). https://doi.org/10.1002/csr.1825

Martínez, Valls, M. del C., & Soriano Román, R. (2022). Women in monitoring positions and market risk. Are the stocks of companies with gender diverse boards less volatile? Frontiers in Psychology, 13. https://doi.org/10.3389/fpsyg.2022.1049175

Pangaribuan, L., & Santoso, R. A. (2023). The Influence Of Financial Stability And External Pressure On Financial Statement Fraud. Jurnal Scientia, 12(1).

Pangestu, S., & Hidayah, Y. (2023). Factors Affecting Audit Quality In Internal Auditors. Jurnal Akademi Akuntansi, 6(4). https://doi.org/10.22219/jaa.v6i4.25924

Permatasari, D., & Laila, U. (2021). Deteksi Kecurangan Laporan Keuangan Dengan Analisis Fraud Diamond Di Perusahaan Manufaktur. Akuntabilitas, 15(2), 241–262. https://doi.org/10.29259/ja.v15i2.13025

Post, C., & Byron, K. (2015). Women on boards and firm financial performance: A meta-analysis. Academy of Management Journal, 58(5), 1546–1571. https://doi.org/10.5465/amj.2013.0319

Qayyum, A., Rehman, I. U., Shahzad, F., Khan, N., Nawaz, F., Kokkalis, P., & Sergi, B. S. (2021). Board gender diversity and stock price crash risk: Going beyond tokenism. Borsa Istanbul Review, 21(3), 269–280. https://doi.org/10.1016/j.bir.2020.10.010

Rehman, M. U., & Khidmat, W. Bin. (2016). Impact of Liquidity & Solvency on Profitability Chemical Sector Impact of Pakistan. Economic Management Innovation, 6(February).

Robinson, G., & Dechant, K. (1997). Building a business case for diversity. Academy of Management Executive, 11(3). https://doi.org/10.5465/ame.1997.9709231661

Sharma, D., & Verma, R. (2020). Reaction of Stock Price to Frauds’ Announcements: Evidence from Indian Banking Sector. Asia-Pacific Journal of Management Research and Innovation, 16(2), 157–166. https://doi.org/10.1177/2319510x20930879

Sieweke, J., Bostandzic, D., & Smolinski, S. M. (2023). The influence of top management team gender diversity on firm performance during stable periods and economic crises: An instrumental variable analysis. Leadership Quarterly, 34(5). https://doi.org/10.1016/j.leaqua.2023.101703

Simionescu, L. N., Gherghina, Ş. C., Tawil, H., & Sheikha, Z. (2021). Does board gender diversity affect firm performance? Empirical evidence from Standard & Poor’s 500 Information Technology Sector. Financial Innovation, 7(1). https://doi.org/10.1186/s40854-021-00265-x

Statista.com. (2021). Distribution of perpetrators of fraud cases worldwide in 2020 and 2021, by gender https://www.statista.com/statistics/461354/distribution-of-perpetrators-of-fraud-cases-by-gender/ (accessed on 23rd January 2024)

Thai, H. M., Dang, K. N., Nor, N. M., Nguyen, H. T., & Nguyen, K. Van. (2023). Corporate tax avoidance and stock price crash risk: the moderating effects of corporate governance. International Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-11-2021-1767

Wahab, Abdul, N. S., Ntim, C. G., Mohd Adnan, M. M., & Tye, W. L. (2018). Top management team heterogeneity, governance changes and book-tax differences. Journal of International Accounting, Auditing and Taxation, 32. https://doi.org/10.1016/j.intaccaudtax.2018.07.002

Wang, Y., Yu, M., & Gao, S. (2022a). Gender diversity and financial statement fraud. Journal of Accounting and Public Policy, 41(2). https://doi.org/10.1016/j.jaccpubpol.2021.106903

Wang, Y., Yu, M., & Gao, S. (2022b). Gender diversity and financial statement fraud. Journal of Accounting and Public Policy, 41(2). https://doi.org/10.1016/j.jaccpubpol.2021.106903

Watson, W. E., Kumar, K., & Michaelsen, L. K. (1993). Cultural Diversity’s Impact On Interaction Process and Performance: Comparing Homogeneous and Diverse Task Groups. Academy of Management Journal, 36(3). https://doi.org/10.5465/256593

Widarjono, Agus. 2007. Ekonometrika Teori dan Aplikasi. Yogyakarta: Ekonisia FE UII.

Widyaningsih, A., Arief, M., & Umar, A. (2023). Role of Board Gender Diversity in Facilitating or Mitigating Fraud: A Research Review. International Journal of Research and Scientific Innovation, X(VII), 242–253. https://doi.org/10.51244/ijrsi.2023.10729

Wolfe, D. T., & Hermanson, D. R. (2004). The Fraud Diamond : Considering the Four Elements of Fraud: Certified Public Accountant. The CPA Journal, 74(12).