Board Of Directors Gender Diversity And Real Earnings Management: Does Female Board Of Director Matter?
DOI:
https://doi.org/10.22219/jrak.v11i2.15915Keywords:
Board of Director, Gender Diversity, Real Earnings Management.Abstract
The Board of directors' characteristic plays an important role as a monitoring mechanism in corporate governance. Previous research shows that gender could determine the existence of manager opportunistic behavior. The existence of females on the board of directors could reduce agency conflict such as earnings management. This research aimed examine gender diversity in explaining earnings management. The sample of this research is the non-financial company listed in Indonesia Stock Exchange (Idx) during 2014-2018. The research method conduct quantitative approach. We used multiple regression analysis to examine the association between board of director gender diversity on real earnings management. The result shows that gender diversity is negatively associated with earnings management. Gender diversity indicates that the number and percentage of female directors could reduce the level of real earnings management, especially through abnormal discretionary expenses. Secondly, there is no different level of real earnings management between firms with and without gender diversity in their board structures.
Downloads
References
Arun, T. G., Almahrog, Y. E., & Ali Aribi, Z. (2015). Female directors and earnings management: Evidence from UK companies. International Review of Financial Analysis, 39, 137–146. https://doi.org/10.1016/j.irfa.2015.03.002
Chen, E., & Gavious, I. (2016). Complementary relationship between female directors and financial literacy in deterring earnings management: The case of high-technology firms. Advances in Accounting, 35, 114–124. https://doi.org/10.1016/j.adiac.2016.06.001
Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting Earnings Management. The Accounting Review.
Dewi, W. P., & Herusetya, A. (2016). Market Response toward Accrual Earnings Management, Real Transactions, and Strategic Revenue Recognition - Earnings Management1. Journal of Accounting and Finance, 17 (2), 71–81. https://doi.org/10.9744/jak.17.2.71-81
Ditta, A. S. A., & Setiawan, D. (2019). Corporate Governance in Indonesia: One Decade Perspective. Jurnal Keuangan Dan Perbankan, 23(1), 58–72.
Duong, L., & Evans, J. (2016). Gender differences in compensation and earnings management: Evidence from Australian CFOs. Pacific Basin Finance Journal, 40, 17–35. https://doi.org/10.1016/j.pacfin.2016.07.004
Fan, Y., Jiang, Y., Zhang, X., & Zhou, Y. (2019). Women on boards and bank earnings management: From zero to hero. Journal of Banking and Finance, 107, 105607. https://doi.org/10.1016/j.jbankfin.2019.105607
Fanani, Z., & Alfiyanti, L. S. (2020). Effect of Board Gender, Political Connection, Military Experience, and Board Activity Toward Company Reputation. Jurnal Reviu Akuntansi Dan Keuangan, 10(2), 271. https://doi.org/10.22219/jrak.v10i2.12314
Gull, A. A., Nekhili, M., Nagati, H., & Chtioui, T. (2018). Beyond gender diversity: How specific attributes of female directors affect earnings management. British Accounting Review, 50(3), 255–274. https://doi.org/10.1016/j.bar.2017.09.001
Hala, G. S. (2019). Women on boards and earnings management: What really matters? Jurnal Keuangan Dan Perbankan, 23(4), 566–578. https://doi.org/10.26905/jkdp.v23i4.3439
Harakeh, M., El-Gammal, W., & Matar, G. (2019). Female directors, earnings management, and CEO incentive compensation: UK evidence. Research in International Business and Finance, 50(May), 153–170. https://doi.org/10.1016/j.ribaf.2019.05.001
Harris, O., Karl, J. B., & Lawrence, E. (2019). CEO compensation and earnings management: Does gender really matters? Journal of Business Research, 98(January), 1–14. https://doi.org/10.1016/j.jbusres.2019.01.013
Jaswadi, J. (2013). Corporate Governance And Accounting Irregularities : Evidence from the two-tier board structure in Indonesia. A Thesis Submitted in Partial Fulfilment of the Requirement for the Degree of Doctor of Business Administration, 1–209.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
Jones, S. (2018). Special Issue on Earnings Management. Abacus, 54(2), 133–135. https://doi.org/10.1111/abac.12129
Kouaib, A., & Almulhim, A. (2019). Earnings manipulations and board’s diversity: The moderating role of audit. Journal of High Technology Management Research, 30(2), 100356. https://doi.org/10.1016/j.hitech.2019.100356
Kyaw, K., Olugbode, M., & Petracci, B. (2015). Does gender diverse board mean less earnings management? Finance Research Letters, 14, 135–141. https://doi.org/10.1016/j.frl.2015.05.006
Li, V. (2019). The effect of real earnings management on the persistence and informativeness of earnings. British Accounting Review, 51(4), 402–423. https://doi.org/10.1016/j.bar.2019.02.005
Lonkani, R. (2019). Gender differences and managerial earnings forecast bias: Are female executives less overconfident than male executives? Emerging Markets Review, 38, 18–34. https://doi.org/10.1016/j.ememar.2018.11.012
Mangkusuryo, Y., & Jati, A. W. (2017). Pengaruh Mekanisme Good Corporate Governance terhadap Manajemen Laba. Jurnal Reviu Akuntansi Dan Keuangan, 7(2), 1067–1080.
Mubarika, N. R., & Handayani, R. S. (2019). Attributes Of The Board Of Commissioners And Corporate Risk (Banking On The Indonesia Stock Exchange). Jurnal Reviu Akuntansi Dan Keuangan, 9(2), 240. https://doi.org/10.22219/jrak.v9i2.8463
Nelwan, M. L., Simatupang, C., & Tansuria, B. I. (2020). Value Relevance of Accounting Information in the Presence of Earnings Management. Jurnal Reviu Akuntansi Dan Keuangan, 10(2), 321. https://doi.org/10.22219/jrak.v10i2.11856
Panda, B., & Leepsa, N. M. (2017). Agency theory: Review of theory and evidence on problems and perspectives. Indian Journal of Corporate Governance, 10(1), 74–95. https://doi.org/10.1177/0974686217701467
Prabowo, M. A. (2018). Board Characteristics and Accounting Performance in Banking Industry: The Indonesian Experience. Jurnal Keuangan Dan Perbankan, 22(1), 114–126. https://doi.org/10.26905/jkdp.v22i1.1742
Ramadhani, Z. I., & Adhariani, D. (2017). Semakin Beragam Semakin Baik? Isu Keberagaman Gender, Keuangan, Dan Investasi Perusahaan. Jurnal Keuangan Dan Perbankan, 21(1), 1–13. https://doi.org/10.26905/jkdp.v21i1.1222
Ronen, J. (2015). Financial Accounting Theory and Research. Wiley Encyclopedia of Management, 1–6. https://doi.org/10.1002/9781118785317.weom010048
Roychowdhurry, S. (2006). Earnings management through real activities manipulation. Journal of Accounting and Economics, 42, 335–370. https://doi.org/10.1016/j.jacceco.2006.01.002
Subekti, I. (2012). Accrual and Real Earnings Management: One of the Perspectives of Prospect Theory. Journal of Economics, Business, and Accountancy Venture, 15 (3), 443–456.
Yuliana, R., & Alim, M. N. (2017). The Islamic Capital Market Response to the Real Earnings Management. Journal of Economics, Business & Accountancy Ventura, 20(1), 61. https://doi.org/10.14414/jebav.v20i1.772
Yuliana, I., & Kholilah, K. (2019). Diversity of the Executive Board, Investment Decisions, and Firm Value: Is Gender Important in Indonesia? Jurnal Reviu Akuntansi Dan Keuangan, 9(3), 387. https://doi.org/10.22219/jrak.v9i3.10019
Zalata, A. M., Tauringana, V., & Tingbani, I. (2018). Audit committee financial expertise, gender, and earnings management: Does gender of the financial expert matter? International Review of Financial Analysis, 55(October 2017), 170–183. https://doi.org/10.1016/j.irfa.2017.11.002
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Greska Redielano Ramadan
This work is licensed under a Creative Commons Attribution 4.0 International License.
Jurnal Reviu Akuntansi dan Keuangan is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
