Panel data analysis reveals female top management chairs curb earnings management in rural banks, indicating that structural authority improves financial reporting integrity.
Key Points
To evaluate the impact of top management gender diversity on earnings management and determine how controlling shareholders moderate this relationship.
Analyzed an unbalanced panel of 213 rural banks in West Java, Indonesia, totaling 2,116 observations from 2016 to 2025.
Estimated parameters using a two-step system generalized method of moments (GMM), alongside random effects and robust fixed effects models for robustness checks.
Proxied earnings management using discretionary loan loss provisions.
The overall proportion of female top managers shows no statistically significant association with discretionary loan loss provisions.
The presence of a female top management chair significantly reduces discretionary loan loss provisions, demonstrating that structural authority curbs opportunistic reporting.
Controlling shareholders positively moderate the relationship between a female chair and discretionary loan loss provisions, showing that concentrated ownership compromises managerial independence.