Do board characteristics moderate the relationship between voluntary adoption of integrated reporting and earnings management? Evidence from an emerging economy

Purpose In recent years, the adoption of integrated reporting (IR) has gained significant attention for its potential influence on reducing information asymmetry and limiting earnings management (EM) practices. The objective of this study is to investigate the association between IR and EM and examine the moderating role of board characteristics in the context of Bangladesh. Design/methodology/approach Using a sample of 241 firm-years derived from the top 50 listed manufacturing companies of Bangladesh for the years 2018–2022, the study examines the relationship between IR and EM. The study also explores the moderating effects of board characteristics using dynamic and static panel data analysis. Findings The findings show a growing trend of IR adoption by sample firms. The regression results show a negative and significant association between IR and EM. The findings also indicate that IR can more efficiently mitigate EM when accompanied by larger boards and increased gender diversity in the boards. Research limitations/implications The applicability of the results of the study across different regions may be constrained by variations in institutional contexts. Practical implications The study provides valuable insights for policymakers and practitioners on the significance of implementing IR to mitigate EM and underscores the crucial role that effective boards can play in this context. Originality/value This study adds value to the existing literature on the relationship between IR and EM in the context of an emerging economy. To the best knowledge of the authors, this is the first study to assess the moderating effects of three board characteristics on the relationship between IR and EM.