Board Gender Diversity and Accounting Conservatism

In this chapter, we examine the effect of board gender diversity on accounting conservatism. Specifically, we investigate changes in the degree of conservatism, defined as asymmetric timeliness of recognition, for firms that transit from an all-male board (audit committee) to a gender diverse board (audit committee). Using a sample of U.S. firms from 1998 to 2016, we show that conservatism increases in firms after the transitions, compared to (i) firms without transitions and (ii) firms with transitions that do not involve the induction of a female director (audit committee member). Furthermore, the results show that the increased conservatism is “sticky”, i.e. it does not reverse after the departure of female directors.