Boardroom Gender Diversity and Earnings Management: Evidence from the Top 50-JSE Listed Companies

Abstract

This study explores the impact of female representation on corporate boards on earning management practicing in the Top 50 companies listed the Johannesburg Stock Exchange for the period 2015 to 2025. This study uses discretionary accrual to capture earnings management, while board gender diversity is proxied by proportion of number of women on the boards. The present study adopted the fixed effects model and two-step system generalized method of moments to test the panel regression. The results of this study reveal that gender diversity negatively correlates with earnings management. These findings offer useful information to investors in assessing the impact of board gender diversity on financial reporting quality. The study extends the literature by providing empirical evidence from developing country on how female representation contributes to effective monitoring and oversight to improve earnings reporting quality. This study advances existing literature by providing guidance for firm managers seeking to strength governance in JSE listed companies, improving quality of financial reporting. The study’s findings reinforce the belief that gender diversity on corporate board is useful in creating value for stakeholders by improving credibility of financial reporting. The results support the effort made by South African government to increase female representation on firm boards.