Diversity of the board, nomination committee and earnings management in the two-tier system

Ferdy Putra and Doddy Setiawan

Journal of Derivatives and Quantitative Studies: ????????????, 2025, vol. 33, issue 3, 207-230

Abstract: PurposeThe purpose of this study was to analyze the impact of diversity on the board of directors, board of commissioners and nomination committees on accrual earnings management.Design/methodology/approachThis study used three dimensions of diversity, namely gender, age and nationality. These three elements are further grouped into the board of directors diversity index and the board of commissioners diversity index. The nomination committee is measured by the quality of its characteristics. The sample of this study consists of manufacturing companies listed on the Indonesia Stock Exchange from 2015 to 2023, which meets the research criteria.FindingsThis study found that the diversity of directors, commissioners and nominating committees reduces accrual earnings management.Research limitations/implicationsBoard diversity and nomination committees improve the quality of financial reporting and corporate governance so that companies can rethink the composition of the board to achieve company goals.Practical implicationsProvide evidence of the importance of the diversity of the board and the quality of nomination committees, so provide input policy and regulations to regulators.Social implicationsThis paper provides evidence that supporting diversity on company boards and the quality of nomination committees can improve company performance and the Indonesian economy as a whole, thereby supporting the vision of a golden Indonesia by 2045.Originality/valueTo the best of the author’s knowledge, research investigating board diversity in a two-tier system with separate boards of directors and a board of commissioners and nomination committees on earnings management has never been conducted.

Keywords: Board diversity; Nomination committee; Earnings management; Two-tier system; Corporate governance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jdqspp:jdqs-08-2024-0037

DOI: 10.1108/JDQS-08-2024-0037

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