Female in board and earnings management: Evidence in Indonesia non-financial firms

Sofian Sofian, S, Patricia Febrina Dwijayanti, Hendra Wijaya

Abstract


The purpose of this study is to analyze the effect of females on the board on earnings management in Indonesia's Non-Financial Firms. Females on the board comprise of females in the board of commissioners, females in the board of directors, and females in the audit committee. This study also breakdown the full sample into small, medium, and large firms. The sample of this study consists of 291 non-financial firms listed in the Indonesia Stock Exchange over the period 2015-2017. This study measures earnings management using discretionary accruals. The data were analyzed using panel data regression. This study found that females in the board of commissioners, females in the board of directors, and females in the audit committee do not affect earnings management. This study also found that females in the board of directors in small firms have a positive effect on earnings management and have a negative effect on medium firms. This study contributes to the role of females in corporate governance in Indonesia's non-financial firms to reduce earnings management.

JEL Classification: G34, M41

DOI: https://doi.org/10.26905/jkdp.v24i4.4230



Keywords


Corporate governance; Earnings management; Female in the audit committee; Female in the board of commissioners; Female in the board of directors

Full Text:

PDF

References


Abdullah, S. N., & Ismail, K. N. I. K. (2016). Women directors, family ownership, and earnings management in Malaysia. Asian Review of Accounting, 24(4), 525–550. https://doi.org/10.1108/ARA-07-2015-0067

Alzoubi, E. S. S. (2016). Ownership structure and earnings management: Evidence from Jordan. International Journal of Accounting and Information Management, 24(2), 135–161. https://doi.org/10.1108/IJAIM-06-2015-0031

Asward, I., & Lina, L. (2015). Pengaruh mekanisme corporate governance terhadap manajemen laba dengan pendekatan conditional revenue model. Jurnal Manajemen Teknologi, 14(1), 15–34. https://doi.org/10.12695/jmt.2015.14.1.2

Ehikioya, B. I. (2009). Corporate governance structure and firm performance in developing economies: Evidence from Nigeria. Corporate Governance: The International Journal of Business in Society, 9(3), 231–243. https://doi.org/10.1108/14720700910964307

Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control separation of ownership and control. Journal of Law and Economics, 26(2), 301–325. https://doi.org/10.1086/467037

Florencea, N., & Susanto, Y. K. (2019). Audit Committee: Woman, Experience, Education on Earnings Management. 73(Aicar 2018), 17–21. https://doi.org/10.2991/aicar-18.2019.5

Gavious, I., Segev, E., & Yosef, R. (2012). Female directors and earnings management in high-technology firms. Pacific Accounting Review, 24(1), 4–32. https://doi.org/10.1108/01140581211221533

Grant Thorton. (2020). Woman in Business 2020: Putting the Blueprint into Action.

Griselda, A., & Sjarief, J. (2019). Pengaruh ukuran perusahaan dan corporate governance terhadap earnings management serta dampaknya terhadap earnings quality. Jurnal Akuntansi, 13(2), 143–168. https://doi.org/https://doi.org/10.25170/jara.v13i2

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

Handoyo, S., & Agustianingrum, W. B. (2017). GCG role and audit quality in reducing earnings management action in Indonesian manufacturing firms. Jurnal Keuangan dan Perbankan, 21(3), 436–445. https://doi.org/10.26905/jkdp.v21i3.673

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, 153–170. https://doi.org/10.1016/j.ribaf.2019.05.001

Hassan, Y., Hijazi, R., & Naser, K. (2017). Does audit committee substitute or complement other corporate governance mechanisms: Evidence from an emerging economy. Managerial Auditing Journal, 32(7), 658–681. https://doi.org/10.1108/MAJ-08-2016-1423

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

Kapoor, N., & Goel, S. (2017). Board characteristics, firm profitability, and earnings management: Evidence from India. Australian Accounting Review, 27(2), 180–194. https://doi.org/10.1111/auar.12144

Khan, M. A., Khidmat, W. Bin, Ullah, F., & Khan, N. U. (2019). Corporate governance and earnings management: The role of board of directors. Sarhad Journal of Management Sciences, 5(2), 317–342.

Kim, H. A., Jeong, S. W., Kang, T., & Lee, D. (2017). Does the presence of female executives curb earnings management? Evidence from Korea. Australian Accounting Review, 27(4), 494–506. https://doi.org/10.1111/auar.12169

Kusumaningtyas, M., Chariri, A., & Yuyetta, E. N. A. (2019). Board of commissioners, audit committee gender, institutional ownership and earnings management. Proceedings of the 5th International Conference on Accounting and Finance (ICAF 2019), 102, 103–108. https://doi.org/10.2991/icaf-19.2019.17

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

Lakhal, F., Aguir, A., Lakhal, N., & Malek, A. (2015). Do women on boards and in top management reduce earnings management? Evidence in France. Journal of Applied Business Research, 31(3), 1107–1118. https://doi.org/10.19030/jabr.v31i3.9236

Loualalen, L., Khemakhem, H., & Fontaine, R. (2015). The impact of audit committee characteristics on earnings management: A Canadian case study. Case Studies in Business and Management, 2(1), 68–86. https://doi.org/10.5296/csbm.v2i1.7901

Murhadi, W. R. (2009). Studi pengaruh good corporate governance terhadap praktik earnings management pada perusahaan terdaftar di PT Bursa Efek Indonesia. Jurnal Manajemen dan Wirausaha, 11(1), 1–10. https://doi.org/10.9744/jmk.11.1.pp.1-10

OECD. (2015). G20/OECD Principles of Corporate Governance. https://doi.org/http://dx.doi.org/10.1787/9789264236882-en

Otoritas Jasa Keuangan. (2014). Direksi dan Dewan Komisaris Emiten atau Perusahaan Publik. Pub. L. No. 33/POJK.04/2014.

Otoritas Jasa Keuangan. (2015). Pembentukan dan Pedoman Pelaksanaan Kerja Komite Audit. Pub. L. No. 55 /POJK.04/2015.

Peni, E., & Vähämaa, S. (2010). Female executives and earnings management. Managerial Finance, 36(7), 629–645. https://doi.org/10.1108/03074351011050343

Qi, B., & Tian, G. (2012). The impact of audit committee's personal characteristics on earnings management: Evidence from China. Journal of Applied Business Research (JABR), 28(6), 1331–1344. https://doi.org/10.19030/jabr.v28i6.7347

Salleh, Z., Hashim, H. A., & Mohamad, N. R. (2012). Accrual quality: The presence of women directors on audit committee boards. Corporate Ownership and Control, 10(1), 675–680. https://doi.org/10.22495/cocv10i1c7art3

Saona, P., Muro, L., San Martín, P., & Baier-Fuentes, H. (2019). Board of director's gender diversity and its impact on earnings management: An empirical analysis for select European firms. Technological and Economic Development of Economy, 25(4), 634–663. https://doi.org/10.3846/tede.2019.9381

Setiawan, D. (2018). Karakteristik dewan komisaris dan manajemen laba: bukti pada peristiwa penawaran saham perdana. Jurnal Siasat Bisnis, 22(2), 164–181. https://doi.org/10.20885/jsb.vol22.iss2.art4

Soebyakto, B. B., Mukhtaruddin, Delamat, H., Dewi, K., & Pratama, A. F. (2018). Female commissioner and director, and earnings management: Study on manufacturing companies listed on Indonesia Stock Exchange. Academy of Accounting and Financial Studies Journal, 22(4), 1–10.

Sun, J., Liu, G., & Lan, G. (2011). Does female directorship on independent audit committees constrain earnings management? Journal of Business Ethics, 99(3), 369–382. https://doi.org/10.1007/s10551-010-0657-0

Susanto, Y. K. (2016). The effect of audit committees and corporate governance on earnings management: Evidence from Indonesia manufacturing industry. International Journal of Business, Economics, and Law, 10(1), 32–37.

Thiruvadi, S., & Huang, H. W. (2011). Audit committee gender differences and earnings management. Gender in Management: An International Journal, 26(7), 483–498. https://doi.org/10.1108/17542411111175469

Ye, K., Zhang, R., & Rezaee, Z. (2010). Does top executive gender diversity affect earnings quality? A large sample analysis of Chinese listed firms. Advances in Accounting, 26(1), 47–54. https://doi.org/10.1016/j.adiac.2010.02.008

Yunianto, A. (2013). Pengaruh penggantian manajemen, dewan komisaris independen, kepemilikan managerial, kepemilikan institusional, dan kualitas audit terhadap manajemen laba. Jurnal Akuntansi dan Investasi, 14(2), 143–157.

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, 170–183. https://doi.org/10.1016/j.irfa.2017.11.002




DOI: https://doi.org/10.26905/jkdp.v24i4.4230

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 813-3180-1534
Email: jkp@unmer.ac.id

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0