Gender diversity and financial statement fraud |
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| Institution: | 1. School of Business, University of Dundee, Dundee, Scotland, UK;2. Centre for Financial and Corporate Integrity, Coventry University, Coventry, UK;3. The Business School, Edinburgh Napier University, Edinburgh, UK;1. Business School, Sungkyunkwan University, 25-2 Sungkyunkwan-ro, Jongno-gu, Seoul 03063, Republic of Korea;2. Department of Management, Korea National Open University, 86 Daehak-ro, Jongno-gu, Seoul 03087, Republic of Korea;3. Business School, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Republic of Korea;1. Mendoza College of Business, University of Notre Dame, Notre Dame, IN 46556, United States;2. Ohio University College of Business, Ohio University, Athens, OH 45701, United States;1. Hershel Anderson Endowed Professor, Department of Accounting, G. Brint Ryan College of Business, University of North Texas, Denton, TX 76201, United States;2. Department of Accountancy and Business Law, Cameron School of Business, University of North Carolina Wilmington, Wilmington, NC 28403, United States;1. School of Public Finance and Taxation, Central University of Finance and Economics, Beijing 100081, China;2. Department of Finance, School of Economics, Huazhong University of Science and Technology, Wuhan 430074, China;3. School of Business, East China University of Science and Technology, Shanghai 200237, China |
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| 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. |
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| Keywords: | Gender diversity Financial statement fraud Bivariate probit model Anti-corruption campaign State-owned enterprises |
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