Board nationality diversity and earnings management: the moderating effect of audit committee independence. Evidence from French listed companies

Purpose This study aims to examine the effect of board nationality diversity on earnings management. It also looks at whether audit committee independence moderates the relationship between the board’s nationality diversity and earnings management, as measured by discretionary accruals. Design/methodology/approach The author examined a sample of SBF120 over a five-year period (2017–2022) using a panel data regression model, the generalized method of moments and a two-stage least squares method to explore the specified relationships. Additionally, this study conducted a regression analysis using an alternative measure of EM to assess robustness. Findings The findings show that, in the French context, board nationality diversity has a negative impact on earnings management. Furthermore, audit committee independence significantly moderates the relationship between board nationality diversity and earnings management. Originality/value The results provide new insights that should enhance the previous literature, particularly about board nationality diversity, audit committee independence and earnings management in the French context. This study also contributes to research on social identity theory and recategorization. In France, and to the best of the author’s knowledge, this is the first study that looked at how audit committee independence affects the link between the board’s cultural diversity and earnings management. This study has implications for board recruitment practices, investor perceptions and regulatory reforms in France and beyond. Additionally, this study could serve as an effective pedagogical tool for courses on corporate governance and accounting.