Board gender diversity and accounting conservatism : evidence from Finland
1University of Oulu, Oulu Business School, Department of Accounting, Accounting
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The objective of the thesis is to investigate the relationship between board gender diversity and conditional accounting conservatism in Finnish context. There is relatively less literature on the effect of board gender diversity on accounting conservatism in comparison with literature on the relationship between the two board attributes — board size and board independence and accounting conservatism. With the global movement of women’s right in economic and social activities, female directorship’s representation on boards has also grown steadily worldwide. Accordingly, studies on gender differences and the effect on firm values of board gender diversity have increased. Women are less likely to engage in actions regarded as unethical and they are more sensitive to ethical issues as well than men. Besides, women tend to be more risk-averse and less overconfident compared with men. The findings of empirical studies about the relationship between board gender diversity and firm financial outcomes are mixed. However, there are researches proving that boards are more effective in monitoring with the increase of women representation on boards. Therefore, I argue that boards with female directors are more likely to employ conservative accounting practices with the purpose of monitoring management more effectively. In the part of empirical test, I utilize the incremental coefficient on bad news in Basu (1997)’s regression model to measure conditional accounting conservatism. The percentage of female directors on the board is used to measure board gender diversity. Using a modified Basu (1997)’s pooled regression model for OMX Helsinki 25 firms over the period 2009–2014, I find no significant effect of board gender diversity on conditional accounting conservatism.
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