Original Research Article | OPEN ACCESS

BOARD INDEPENDENCE AND FINANCIAL STATEMENT FRAUD: THE MODERATING EFFECT OF FEMALE GENDER DIVERSITY

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Received: 4 Oct 2017        Accepted: 15 Dec 2017        Published: 31 Dec 2017

Citation: BOARD INDEPENDENCE AND FINANCIAL STATEMENT FRAUD: THE MODERATING EFFECT OF FEMALE GENDER DIVERSITY. Account Tax Rev 2002; 1(1):196-221 doi:

© 2002 The authors.
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Abstract

We investigate the relation between board independence and financial statement fraud using female gender diversity as moderating variable. This is against the backdrop of the paucity of extant literature addressing the issue. The dichotomous nature of the dependent variable of financial statement fraud necessitated the use of the logit panel least square regression technique in estimating the coefficients of the regression variables. The data was sourced from a sample of seventy-five companies listed on the Nigerian Stock Exchange as at 31st December 2016. The sample was filtered from the one hundred and eighty-four firms listed on the Nigeria Stock Exchange as at 31st December of the same year. The regression analysis reveals a significant negative relationship between the explanatory
variables of board independence, female gender diversity and financial statement fraud. However, the joint effect of board independence and financial statement fraud did not produce the desired result. The relationship between the interactions of the two variables is positive and contrary to our apriori expectation of a negative relationship. Our evidence suggests that independent female board members may not necessarily advance the objective of quality financial reporting. It is recommended that female board members should be appointed as executive directors who may not exercise independence.

JEL Classification: G340

Keywords: Board independence, female gender diversity, hegemonic masculinity, homosociality, agency theory.