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Gender diversity of non-CFO subordinate executives and real earnings management
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Fang Zhao 
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
This paper examines how gender diversity among subordinate executives, excluding the chief financial officer (CFO), relates to real earnings management. The research question addresses a gap in the literature and responds to the practical need for improving corporate governance. This study examines a sample of U.S. firms from 1992 to 2023. Real earnings management is measured following Roychowdhury (2006). A multiple regression analysis is used to examine the association between the gender diversity of non-CFO subordinate executives and real earnings management. The results show that firms with female non-CFO subordinate executives engage in less real earnings management, after controlling for other factors associated with real earnings management. This suggests that the presence of women in these roles mitigates the manipulation of real activities. The results are robust across alternative measures of real earnings management and remain consistent when excluding firms with female chief executive officers (CEOs) from the sample. This study contributes to the literature on the relationship between gender diversity and financial reporting, as well as real earnings management. In addition to enhancing academic understanding, it highlights the role of gender diversity in internal monitoring mechanisms within top management teams. This study is relevant for both practice and policy regarding corporate governance and financial reporting.
Keywords: Subordinate Executives, Real Earnings Management, Top Management Team
Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to credit (contributor roles taxonomy) standards.
Declaration of conflicting interests: The Author declares that there is no conflict of interest.
JEL Classification: G32, M41
Received: 22.10.2024
Revised: 19.05.2025; 25.07.2025
Accepted: 04.08.2025
Published online: 06.08.2025
How to cite this paper: Zhao, F. (2025). Gender diversity of non-CFO subordinate executives and real earnings management. Corporate Governance and Sustainability Review, 9(3), 136–144. https://doi.org/10.22495/cgsrv9i3p11
