Management Accounting Section Midyear Meeting

Senior Leadership over Financial Reporting: Does Female Representation on the Board Impact the Association between Executive Gender and Reporting Failures?

• In Event: Gender Diversity

Abstract

We test whether gender relates to financial reporting failures by simultaneously examining the impact of female representation at the board (i.e., the audit committee) and executive officer (i.e., the CEO, CFO, and executive accountant) levels. Univariate tests indicate restatements occur more often when the audit committee excludes females, suggesting reporting benefits to gender diversity on the audit committee. In multivariate analyses, we fail to find evidence of an association between restatement likelihood and the gender of the CEO or CFO regardless of audit committee gender diversity. In contrast, we find robust evidence of a reduction in restatement likelihood associated with female executive accountants in firms that exclude females from the audit committee. Accordingly, this evidence is consistent with reporting benefits to gender diversity in a position with direct responsibility over financial reporting (i.e., when a female holds the executive accountant position). Moreover, this evidence is consistent with role congruence theory and critical mass theory which predict female executives in corporations adhering to strong gender stereotypes are more likely than males to feel pressure to avoid failures that would confirm biases regarding their competence.

Authors

• Adrienne C Rhodes, University of Iowa

• Daniel Russomanno, University of Arizona-Tucson