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Women directors, family ownership and earnings management in Malaysia

Women directors, family ownership and earnings management in Malaysia PurposeThe 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/approachThe study uses non-finance firms listed on Bursa Malaysia over a period of four years, i.e. from 2008 until 2011.FindingsThe 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/valueThis 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asian Review of Accounting Emerald Publishing

Women directors, family ownership and earnings management in Malaysia

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1321-7348
DOI
10.1108/ARA-07-2015-0067
Publisher site
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Abstract

PurposeThe 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/approachThe study uses non-finance firms listed on Bursa Malaysia over a period of four years, i.e. from 2008 until 2011.FindingsThe 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/valueThis 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.

Journal

Asian Review of Accounting – Emerald Publishing

Published: Dec 5, 2016

References

  • Institutional investors and earnings management: Malaysian evidence
  • Board, audit committee, culture and earnings management: Malaysian evidence
  • The causes of gender diversity in Malaysian large firms
  • Gender, ethnic and age diversity and performance of large Malaysian firms
  • Accrual management and the independence of the boards of directors and audit committees
  • Does women participation on boards create value? The impact of societal perceptions and corporate governance in emerging markets
  • Ethical attitudes of future business leaders: do they vary by gender and religiosity?
  • The ethicalness of earnings management in the Middle East: a survey of managers and auditors in Jordanian companies
  • Founding-family, ownership and firm performance: evidence from the S&P 500
  • Board composition: balancing family influence in S&P 500 firms