Corporate Governance And Earnings Management: The Role Of Gender Diversity And Political Connections In Gulf Cooperation Council Countries

Abiot Tessema, Zayed University
Heba Abou-El-Sood, Cairo University

Document Type

Article

Source of Publication

Gender In Management

Publication Date

10-23-2025

Abstract

PurposeMotivated by policy deliberations, this study aims to investigate how board gender diversity (BGD) and political connections (PCs) influence earnings management (EM) in Gulf Cooperation Council (GCC) countries, and examines whether political connections moderate the BGD-EM association.Design/methodology/approachUsing 2012-2022 data for non-financial GCC firms, the authors estimate firm- and year-fixed-effects models. Two-stage least squares (2SLS) method and propensity-score matching (PSM) procedure address reverse causality and selection bias. Multiple proxies for BGD and EM support sensitivity checks.Findings BGD is negatively associated to EM, highlighting that gender-diverse boards constrain opportunistic reporting. This association is notably stronger in politically-connected firms. Additionally, politically-connected firms exhibit significantly lower EM. These findings remain consistent across alternative specifications and after addressing endogeneity concerns, emphasizing that both BGD and PCs act as effective governance mechanisms curbing EM in the GCC context.Practical implicationsFindings offer valuable practical implications for investors, governments, regulatory authorities and policymakers in the GCC region. Investors can advocate for greater female representation on boards to improve oversight and reporting quality. Regulators should combine gender diversity mandates with transparency requirements around political ties to strengthen corporate governance practices and deter opportunistic reporting in GCC countries.Originality/valueThis study contributes to the existing literature by providing a multi-theory lens to explain the associations based on behavioral agency, resource dependence and elite theories. It extends CG literature, particularly on BGD. The study situates the BGD-EM nexus within the GCC's distinctive mix of family ownership, Islamic norms and pervasive state influence, providing novel evidence that PCs amplify, rather than mitigate, the monitoring benefits of gender-diverse boards.

ISSN

1754-2413

Publisher

Emerald

Volume

40

Issue

8

First Page

929

Last Page

950

Disciplines

Business

Keywords

Board gender diversity, Earnings management, Political connections, GCC, Emerging markets

Indexed in Scopus

no

Open Access

no

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