Do CEO Attributes, Audit Quality, and Gender Diversity Influence Earnings Management? Evidence from Pakistan

Abstract

Purpose

Earnings management remains a critical concern for investors and policymakers, particularly in emerging economies. This study examines the influence of CEO attributes, audit quality, and gender diversity on earnings management in Pakistan, with a focus on their moderating roles.

Design/Methodology/Approach

The study analyzes a sample of 150 non-financial firms listed on the Pakistan Stock Exchange (PSE) over the period 2016–2021, comprising 750 firm-year observations. Robust econometric techniques are employed to test the impact of CEO attributes, female board representation, and audit quality on earnings management. Further, the study examines the moderating effects of CEO tenure, CEO experience, and audit quality on the relationship between female directors and earnings management.

Findings

The results reveal that female board representation is positively associated with earnings management, which contrasts with prior studies that generally report a negative relationship. Moreover, the moderating effects of CEO tenure, CEO experience, and audit quality provide unique insights into how leadership characteristics and audit mechanisms shape the relationship between gender diversity and earnings management.

Originality

This study is the first to explore the moderating role of CEO attributes and audit quality alongside gender diversity in the Pakistani context. The use of a large dataset and robust methodological approach strengthens the reliability of the findings, offering novel contributions to the literature on corporate governance and earnings management.

Research Implications

The findings carry important implications for managers, investors, policymakers, regulators, and academic researchers. They highlight key governance mechanisms that influence earnings management practices, providing insights relevant to both emerging and developed economies. For practitioners, this study identifies critical factors such as CEO characteristics and board gender composition that affect earnings quality. For scholars and policymakers, it offers a comprehensive framework for understanding the dynamics of governance and earnings management, guiding future research and regulatory reforms.