The Moderating Role of Board Ownership on The Relationship Between Gender Diversity and Accounting Fraud: Evidence From KSA

Abstract

This study examines the impact of gender diversity on corporate boards and its effect on accounting fraud, with a specific focus on the moderating role of ownership. The relevance of this research lies in its potential to enhance corporate governance and fraud prevention strategies. The purpose is to investigate whether increased gender diversity is associated with reduced instances of accounting fraud and to explore how ownership influences this relationship. Using data from 30 non-financial companies listed on the Saudi Stock Exchange from 2019 to 2023, totaling 150 observations, the study employs three distinct models—Altman, Springate, and Zmijewski—for comprehensive statistical analysis. Results consistently indicate a negative relationship between gender diversity on boards and accounting fraud across all models. Specifically, the Altman model shows a strong negative relationship (t-test: -14.027, p-value: 0.000), the Springate model indicates a significant negative relationship (t-test: -2.707, p-value: 0.025), and the Zmijewski model reveals a highly significant negative relationship (t-test: -25.547, p-value: 0.000). Furthermore, ownership significantly moderates this relationship in all models, with varying effects: positive moderation in the Altman model (t-test: 4.567, p-value: 0.000) and negative moderation in the Springate (t-test: -5.455, p-value: 0.001) and Zmijewski models (t-test: -9.342, p-value: 0.000). In conclusion, increasing gender diversity on boards is associated with reduced accounting fraud. Ownership's moderating effect varies across models but underscores the importance of board composition and ownership structure in corporate governance and fraud prevention efforts.