Top Management Gender Diversity and Earnings Management: The Moderating Role of Controlling Shareholders in Indonesian Rural Banks

This study investigates the influence of top management gender diversity on earnings management and examines the moderating role of controlling shareholders in this relationship. The sample comprised 213 rural banks in West Java, Indonesia, yielding 2116 unbalanced panel observations over the period 2016–2025. The primary estimates were obtained using the two-step system generalized method of moments. Robustness checks were conducted using a random effects model and a fixed effects model with robust standard errors. The results reveal that the proportion of female top managers has no significant effect on earnings management, measured through discretionary loan loss provisions. In contrast, the presence of a female top management chair significantly reduces discretionary loan loss provisions, highlighting the importance of structural authority in enabling female top managers to constrain opportunistic financial reporting. Controlling shareholders positively moderate the relationship between a female chair and discretionary loan loss provisions. This finding suggests that high ownership concentration weakens the chair’s ability to constrain earnings manipulation by compromising managerial independence. This study is limited to conventional rural banks and uses only discretionary loan loss provisions as a proxy for earnings management, which may not capture operational manipulation. Future research should incorporate measures of real earnings management and conduct comparative analyses across a broader range of financial institutions to enhance the generalizability of the findings.