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Impact of female directors on the board and foreign institutional investors on earning manipulation of Chinese listed companies

Muhammad Safdar Sial (COMSATS University Islamabad, Islamabad, Pakistan) (Institute of Business Research, University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam)
Xuan Vinh Vo (Institute of Business Research and CFVG Ho Chi Minh City, University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam)
Lara Al-Haddad (Department of Finance and Banking Sciences, Yarmouk University, Irbid, Jordan)
Thao Nguyen Trang (Division of Computational Mathematics and Engineering, Institute for Computational Science, Ton Duc Thang University, Ho Chi Minh City, Vietnam) (Faculty of Mathematics and Statistics, Ton Duc Thang University, Ho Chi Minh City, Vietnam)

Asia-Pacific Journal of Business Administration

ISSN: 1757-4323

Article publication date: 26 September 2019

Issue publication date: 4 November 2019

Abstract

Purpose

The purpose of this paper is to check the impact of female directors on the board and foreign institutional investors on earnings manipulation.

Design/methodology/approach

The data sample includes Chinese listed companies on the Shenzhen and Shanghai stock exchanges. The data are collected from China Stock Market and Accounting Research database covering the period from 2010 to 2017. The authors use a dynamic generalized method of moments in the study.

Findings

The findings show that the presence of female director on the board has a significant negative impact on both discretionary accruals and real earning management. However, the authors obtain different results for foreign institutional investor investors. This may be the result of myopia as the foreign institutional stockholders in Chinese companies are looking for quick profit encouraging management to manipulate earnings. the findings survive several robustness tests.

Originality/value

The authors expect the research results provide ample evidence about how female directors affects earnings manipulation, and also hope the research helps to understand how, in China, institutional ownership affects earnings manipulation.

Keywords

Citation

Sial, M.S., Vo, X.V., Al-Haddad, L. and Trang, T.N. (2019), "Impact of female directors on the board and foreign institutional investors on earning manipulation of Chinese listed companies", Asia-Pacific Journal of Business Administration, Vol. 11 No. 3, pp. 288-300. https://doi.org/10.1108/APJBA-10-2018-0189

Publisher

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Emerald Publishing Limited

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