Financial Fraud, Independent Female Directors and CEO Power

This paper investigates the effect of female directors on financial fraud, focusing on the role of independent female directors and their demographics, such as experience, financial expertise, and audit committee membership. We find that independent female directors have a negative and significant i...

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Bibliographic Details
Published inJournal of risk and financial management Vol. 15; no. 12; pp. 1 - 24
Main Authors Yami, Nafisah, Poletti-Hughes, Jannine
Format Journal Article
LanguageEnglish
Published Basel MDPI 01.12.2022
MDPI AG
Subjects
Advisors
Audits
Boards of directors
CEO power
Corporate governance
Decision making
Executives
financial fraud
Financial reporting
Fraud
Gender
gender diversity
Hypotheses
independent female directors
Literature reviews
United States > US
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Summary:This paper investigates the effect of female directors on financial fraud, focusing on the role of independent female directors and their demographics, such as experience, financial expertise, and audit committee membership. We find that independent female directors have a negative and significant influence on financial fraud, which is enhanced by their experience and financial expertise. The positive effect is also significant for those female directors that are members of the audit committee and have financial expertise. Independent female directors offset the increased likelihood of fraud in the presence of powerful CEOs, suggesting that the impact of their contribution is more valuable when there is managerial entrenchment.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm15120575