Women on Corporate Boards Encourage Better Financial Reporting

A female presence on a company board reduces the chance of financial restatements by close to 40 percent, according to a new US study.

The study, which appears in the December issue of the American Accounting Association journal Accounting Horizons, found that the presence of at least one woman on an otherwise male board is associated with a likelihood of restatement that is 62 percent of the likelihood without the gender diversity.

The study was carried out by Lawrence J. Abbott of the University of Wisconsin-Milwaukee, Susan Parker of Santa Clara University and Theresa Presley of Kansas State University. The researchers found that a woman’s board presence does more to encourage financial integrity than such tried-and-true measures as requiring the board’s audit committee to consist entirely of independent directors, one of them with financial expertise, and mandating that it meet at least four times annually.

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