Do Women Top Managers Always Mitigate Earnings Management? Evidence from China

This study investigates the non-linear association between women top managers (WTM) and earnings management and further examines the moderating effect of monitoring intensity. Drawing on leadership style theory and using a sample of Chinese listed firms over the period of 2001-2011, our findings reveal the inverted-U relationship between WTM and earnings management, suggesting that different proportions of WTM can shape distinct leadership styles and processes of decision-making, and thus bring out asymmetric earnings qualities. Moreover, the monitoring intensity attenuates the inverted-U relationship between WTM and earnings management. These findings are robust to a variety of sensitivity tests and our conclusions are still valid after controlling for endogeneity. As additional tests, we find that the inverted-U relationship between WTM and earnings management is valid for both female directors and female managers, but only stands for the subsample with low business complexity, low information transparence, and state-owned enterprises.