Board of Directors Diversity, Public Ownership, and Earnings Quality

Hana Budiyati and Hendra Wijaya ()
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Hana Budiyati: Universitas Katolik Widya Mandala Surabaya
Hendra Wijaya: Universitas Katolik Widya Mandala Surabaya

A chapter in Proceedings of the 4th Asia Pacific Management Research Conference (APMRC 2022), 2023, pp 649-663 from Springer

Abstract: Abstract Earnings quality is one of the indicators to assess the level of success of the company’s operations. Many factors affect earnings quality, one of which is the diversity of the company’s board of directors and public ownership. This study examines the effect of board diversity, including gender, age, tenure, educational background, and public ownership, on earnings quality. The research objects are public companies listed on the Indonesia Stock Exchange from 2015–2019. The sample used is 113 manufacturing companies selected with the purposive sampling technique. The analytical technique used in this research is multiple linear regression analysis. The data source is obtained from the annual reports of manufacturing companies listed on the Indonesia Stock Exchange (IDX). This study shows that board age has a negative effect on earnings quality and indicated that diversity of age shows different ways of thinking and working leads to lower earning quality. This study also shows that public ownership has a positive effect on earnings quality and indicated that the existence of public shareholders can reduce agency conflicts and shown through better earning quality. Meanwhile, gender, tenure, and educational background of the board do not affect earnings quality.

Keywords: Diversity; Board of Directors; Public Ownership; Earnings Quality (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-076-3_50

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DOI: 10.2991/978-94-6463-076-3_50

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