Gender diversity and financial statement fraud

Yang Wang (Lead / Corresponding author), Mei Yu, Simon Gao

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

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.
Original languageEnglish
Article number106903
Number of pages18
JournalJournal of Accounting and Public Policy
Volume41
Issue number2
Early online date14 Oct 2021
DOIs
Publication statusPublished - 1 Mar 2022

Keywords

  • Anti-corruption campaign
  • Bivariate probit model
  • Financial statement fraud
  • Gender diversity
  • State-owned enterprises

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