Women on the board and their joint effect on accruals-based earnings management and real earnings management

Abstract

Much emphasis has been placed on the composition of women on the board lately. With Norway in the forefront, other countries within Europe have followed their path and implemented gender quotas on the board, and EU member countries are suggested to have 40 percent women on their boards by 2020. This study determines the effect gender-diverse boards has on accrualsbased and real earnings management by comparing Norway and Sweden. The study also determines the effect independent women board members have on earnings management. Our samples consist of Norwegian and Swedish publicly listed companies, and the total number of observations amounts to 2165 from 2011 to 2018. After conducting several OLS-regressions we are able to conclude that both women board members and independent women board members have a decreasing effect on primarily accruals-based earnings management in Sweden, and only weak results are found for real earnings management in Sweden. Though, no conclusions can be drawn for the gender quota pioneer Norway, due to insignificant results.