The Relationship Between Board Gender Diversity and Real Earnings Management in U.S. Companies

In the realm of corporate finance, real earnings management (REM) is crucial for maintaining the transparency and integrity of financial reporting. Unlike accrual-based management, REM involves strategic decisions impacting cash flow and operations, drawing significant attention after the Enron scandal and the Sarbanes-Oxley Act. Recently, the importance of board gender diversity in corporate governance has been increasingly recognized. This study explores the relationship between board gender diversity and REM in U.S. public companies from 2021 to 2023. Using data from BoardEx and Compustat, and employing regression analysis, the research examines how gender diversity influences REM, controlling for variables such as company size and industry type. The findings reveal a significant negative correlation between board gender diversity and REM, indicating that more diverse boards tend to adopt transparent and responsible financial reporting strategies. This study underscores the importance of promoting gender diversity in corporate leadership to enhance ethical and transparent financial reporting, providing valuable insights for corporate governance, policymaking, and business practices.