Does Gender Interact with Financial Reporting Quality?

Ivana Tadić, Željana Aljinović Barać and Jurica Kurtović

Central European Business Review, 2025, vol. 2025, issue 3, 65-85

Abstract: The underrepresentation of women in leadership positions is common evidence of gender inequality. Consequently, the European Commission brought a directive to balance the underrepresentation of women on boards in EU countries. Often, females are presumed to be less favourable for top management positions in successful companies and are faced with different obstacles during their careers. However, they possess many different characteristics, which makes them excellent leaders and may create positive differences in financial reporting quality (FRQ). Croatia still lags behind other EU countries in terms of the share of women within corporate boards; therefore, in this paper, we aim to investigate whether the FRQ differs based on the boardroom's gender structure. The research is conducted on a sample of listed Croatian companies using univariate and multivariate statistical methods. Two sub-samples were formed in order to capture the effects of the Gender Equality Act (GEA) application. Our results show that women are still underrepresented as board members despite the regulations that introduced a list of activities for gender equality. The gender structure of corporate boardrooms is significantly associated with FRQ, and issuing positive audit opinions is related to tilted-structured management boards, where up to 40% of the board members are women. The contribution of our research is twofold: to investigate the trends and level of gender inequality in leadership positions of Croatian listed companies, and to identify whether the gender structure of top management plays a significant role in a company's FRQ. Implications for Central European audience: The results of this study provide significant insight into the underrepresentation of women on corporate boards within EU countries. Our findings and recommendations may be of special interest, particularly for Central European countries that share the experience of transition from planned to market economy with Croatia and are characterised by similar institutional, political, economic and financial systems. The topic is crucial in contemporary business, especially following and adapting to the directives brought by the European Commission, pinpointing the issue as a current and future challenge.

Keywords: financial reporting quality; gender stereotyping; leadership styles (search for similar items in EconPapers)
JEL-codes: M40 M50 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.18267/j.cebr.387

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