Board diversity and financial reporting quality: evidence from China

Irfan Ullah, Qiujun Zhao, Aurang Zeb, Amjad Iqbal and Muhammad Arif Khan

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 2, 2142812

Abstract: This study explores the relationship between board diversity and financial reporting quality (FRQ) in China, an emerging market, by using panel data techniques. Specifically, it investigates firms registered from 2005 to 2018. Board diversity is categorised into relation (i.e., gender and age), task (i.e., education, tenure, and experience), and overall board diversity (sum of relation and task diversities). Findings indicate that board diversity has a significant positive impact on FRQ. The relationship between board diversity and FRQ is also strong in non-state-owned firms and during noncrisis periods. Findings remain consistent after numerous robustness checks comprising instrumental approach, propensity score matching, generalised method of moment, lag of independent variables, Heckman two-step model, change analysis, and alternative FRQ measures. Overall, board diversity is found to be associated with corporate outcomes.

Date: 2023
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DOI: 10.1080/1331677X.2022.2142812

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