Audit Committee Gender Diversity and Its Impact on Earnings Quality

The persistent concerns over financial reporting credibility and the role of governance structures have heightened scholarly interest in the impact of boardroom diversity on earnings quality. Despite growing advocacy for gender inclusion, empirical evidence on the influence of audit committee gender diversity on earnings quality remains inconclusive, particularly in emerging markets. This study investigates the relationship between the gender composition of audit committees and the quality of reported earnings among 150 publicly listed firms in Nigeria from 2014 to 2023. The primary objective is to determine whether increased female representation on audit committees enhances earnings quality, as measured by discretionary accruals. A quantitative research design was employed, using secondary panel data from annual reports. The study applied a random effects panel regression model alongside robust diagnostic tests to analyze the impact of gender diversity while controlling for firm-specific characteristics. Findings reveal that audit committees with a higher proportion of female members are significantly associated with reduced discretionary accruals, suggesting a positive influence on earnings quality. The results support the notion that gender-diverse audit committees exhibit stronger oversight and ethical vigilance, thereby enhancing financial reporting credibility. It is concluded that gender diversity on audit committees contributes to better earnings quality, aligning with agency and resource dependence theories. The study recommends that regulators and corporate boards institute gender-inclusive policies to strengthen audit committee effectiveness. Limitations include potential omitted variable bias and reliance on accounting-based proxies for earnings quality. Future research may explore cross-country comparisons and alternative governance mechanisms. The originality of this study lies in its focused examination of audit committee gender diversity, distinct from board-level diversity, and its direct linkage to earnings quality, offering novel insights for policy-makers, investors, and scholars in corporate governance.