The Effects and the Mechanisms of Board Gender Diversity: Evidence from Financial Manipulation

43 Pages Posted: 9 Mar 2017 Last revised: 12 Jan 2018

See all articles by Aida Sijamic Wahid

Aida Sijamic Wahid

University of Toronto - Rotman School of Management; University of Toronto - Accounting

Date Written: December 22, 2017


This study examines the impact of board gender diversity on financial misconduct. The findings suggest firms with gender-diverse boards commit fewer financial reporting mistakes and engage in less fraud. The findings hold after accounting for the potentially endogenous nature of board demographic characteristics via instrumental variable approach. Furthermore, the findings are consistent in pre- and post-regulation (Sarbanes-Oxley) periods and hold for firms with good and bad governance. The findings do not seem driven by differences in effort or quality, in terms of independence and expertise, of female and male directors. The benefit derived from increasing the number of female directors on corporate boards seems to diminish at higher levels of gender diversity, indicating that impact of gender diversity on decreasing the likelihood of financial misconduct may be a result of a change to board group dynamics.

Keywords: Corporate governance, board of directors, gender, board composition, board diversity, accounting quality, restatement

JEL Classification: G10, G30, G38, J10, J16, M41

Suggested Citation

Wahid, Aida Sijamic and Wahid, Aida Sijamic, The Effects and the Mechanisms of Board Gender Diversity: Evidence from Financial Manipulation (December 22, 2017). Journal of Business Ethics, Forthcoming, Rotman School of Management Working Paper No. 2930132, Available at SSRN: or

Aida Sijamic Wahid (Contact Author)

University of Toronto - Accounting ( email )

105 St George St
Toronto, ON M5S 3E6

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4

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