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Gender diversity and financial statement fraud

Wang, Yang; Yu, Mei; Gao, Simon

Authors

Yang Wang

Mei Yu



Abstract

This study investigates the role of gender diversity in fraud commission and detection with a view to identifying whether companies with more female corporate leaders are less likely
to be involved in financial statement fraud. Using a bivariate probit model, the role of female corporate leaders in financial statement fraud commission and detection is examined for Chinese listed companies from 2007 to 2018. The representation of female corporate leaders increases the likelihood of fraud detection, thus reducing firms’ propensity to engage in fraud. The finding confirms that women are risk averse and more committed to ethical practices than men in corporate leadership positions. Moreover, this impact of gender diversity is contingent upon the nature of ultimate controllers of listed companies: more female representation in top leadership roles can mitigate fraud commission or detect fraud effectively in non-state-owned enterprises, but not in state-owned enterprises. In addition, the recent anti-corruption campaign initiated by Chinese President Jinping Xi is a powerful form of public governance. Female corporate leaders play a more positive role in mitigating fraud commission and detecting fraud commission in the post-campaign period than in the pre-campaign period.

Citation

Wang, Y., Yu, M., & Gao, S. (2022). Gender diversity and financial statement fraud. Journal of Accounting and Public Policy, 41(2), Article 106903. https://doi.org/10.1016/j.jaccpubpol.2021.106903

Journal Article Type Article
Acceptance Date Oct 1, 2021
Online Publication Date Oct 14, 2021
Publication Date 2022-04
Deposit Date Nov 16, 2021
Publicly Available Date Oct 15, 2023
Print ISSN 0278-4254
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 41
Issue 2
Article Number 106903
DOI https://doi.org/10.1016/j.jaccpubpol.2021.106903
Public URL http://researchrepository.napier.ac.uk/Output/2821364

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