Female leadership and financial reporting quality in emerging markets

Many countries are enacting regulations or/and recommendations to promote gender equality in the workplace, especially in the top leadership and management positions. However, despite current research on gender diversity and firm outcomes, we know comparatively little about how different female leadership roles drive such outcomes. This study explores this notion in emerging market by examining the effect of female leadership on financial reporting quality in Egypt. This study uses multiple regression analyses for a sample of 1686 firm-year observations listed on the Egyptian Stock Exchange over the period 2011-2020. Our results show that female directors, female executives and females on audit committees are positively associated with financial reporting quality. Similarly, higher independent female directors were positively related to financial reporting quality. Lastly, executive female directors are less involved in earnings management practices. Our findings are robust to possible omitted variables bias, alternative measurements and endogeneity issues. Taken together, our results are in line with the view that gender diversity is an effective monitoring instrument, which attenuates agency conflict and thus upholds financial reporting quality. These findings should be of great interest for policymakers, academics and stakeholders