Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity
Purpose – This study investigates the impact of ESG performance on earnings management practices in Indonesia and also examines whether gender diversity on the board of commissioners moderates this relationship. Design/methodology/approach – The sample of this study consisted of nonfinancial compani...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2025-06-01
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| Series: | AJAR (Asian Journal of Accounting Research) |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/AJAR-12-2023-0414/full/pdf |
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| _version_ | 1850207707375599616 |
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| author | Vincentia Anindha Primacintya Indra Wijaya Kusuma |
| author_facet | Vincentia Anindha Primacintya Indra Wijaya Kusuma |
| author_sort | Vincentia Anindha Primacintya |
| collection | DOAJ |
| description | Purpose – This study investigates the impact of ESG performance on earnings management practices in Indonesia and also examines whether gender diversity on the board of commissioners moderates this relationship. Design/methodology/approach – The sample of this study consisted of nonfinancial companies listed on the Indonesia Stock Exchange from 2014 to 2022. ESG performance is proxied by the ESG score; earnings management is calculated by the Jones modified model. Gender diversity is represented by the proportion of female board commissioners. This research employs a balanced panel; after conducting model tests, the common effect model is used to test the first hypothesis, and the fixed effect model is applied to test the second hypothesis. Findings – This study provides empirical evidence that higher ESG performance in a company is associated with lower earnings management. Companies with a diverse gender composition on their board of commissioners demonstrate a stronger negative relationship between ESG performance and earnings management. Research limitations/implications – Empirical evidence on company ESG performance is important because Indonesia, as a G20 member, is striving to maximize the implementation of the SDGs. This study provides empirical evidence on the significance of Goal 5 of the SDGs, which pertains to gender equality in Indonesia. Originality/value – This study complements previous research on ESG in Indonesia by providing empirical evidence on the impact of strong ESG performance among companies. Referring to Indonesia’s two-tier board system and Goal 5 of the SDGs, which focuses on gender equality, this study examines the value of gender diversity on the board of commissioners. |
| format | Article |
| id | doaj-art-aed5ffed55474b17a2c554ece0a5bba6 |
| institution | OA Journals |
| issn | 2459-9700 2443-4175 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | AJAR (Asian Journal of Accounting Research) |
| spelling | doaj-art-aed5ffed55474b17a2c554ece0a5bba62025-08-20T02:10:25ZengEmerald PublishingAJAR (Asian Journal of Accounting Research)2459-97002443-41752025-06-0110329431410.1108/AJAR-12-2023-0414Environmental, social and governance (ESG) performance and earnings management: the role of gender diversityVincentia Anindha Primacintya0Indra Wijaya Kusuma1Faculty of Business, Universitas Kristen Duta Wacana, Yogyakarta, IndonesiaFaculty of Economic and Business, Universitas Gadjah Mada, Yogyakarta, IndonesiaPurpose – This study investigates the impact of ESG performance on earnings management practices in Indonesia and also examines whether gender diversity on the board of commissioners moderates this relationship. Design/methodology/approach – The sample of this study consisted of nonfinancial companies listed on the Indonesia Stock Exchange from 2014 to 2022. ESG performance is proxied by the ESG score; earnings management is calculated by the Jones modified model. Gender diversity is represented by the proportion of female board commissioners. This research employs a balanced panel; after conducting model tests, the common effect model is used to test the first hypothesis, and the fixed effect model is applied to test the second hypothesis. Findings – This study provides empirical evidence that higher ESG performance in a company is associated with lower earnings management. Companies with a diverse gender composition on their board of commissioners demonstrate a stronger negative relationship between ESG performance and earnings management. Research limitations/implications – Empirical evidence on company ESG performance is important because Indonesia, as a G20 member, is striving to maximize the implementation of the SDGs. This study provides empirical evidence on the significance of Goal 5 of the SDGs, which pertains to gender equality in Indonesia. Originality/value – This study complements previous research on ESG in Indonesia by providing empirical evidence on the impact of strong ESG performance among companies. Referring to Indonesia’s two-tier board system and Goal 5 of the SDGs, which focuses on gender equality, this study examines the value of gender diversity on the board of commissioners.https://www.emerald.com/insight/content/doi/10.1108/AJAR-12-2023-0414/full/pdfEarnings managementSDG 5ESGGender diversityFemale board of commissioners |
| spellingShingle | Vincentia Anindha Primacintya Indra Wijaya Kusuma Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity AJAR (Asian Journal of Accounting Research) Earnings management SDG 5 ESG Gender diversity Female board of commissioners |
| title | Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity |
| title_full | Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity |
| title_fullStr | Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity |
| title_full_unstemmed | Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity |
| title_short | Environmental, social and governance (ESG) performance and earnings management: the role of gender diversity |
| title_sort | environmental social and governance esg performance and earnings management the role of gender diversity |
| topic | Earnings management SDG 5 ESG Gender diversity Female board of commissioners |
| url | https://www.emerald.com/insight/content/doi/10.1108/AJAR-12-2023-0414/full/pdf |
| work_keys_str_mv | AT vincentiaanindhaprimacintya environmentalsocialandgovernanceesgperformanceandearningsmanagementtheroleofgenderdiversity AT indrawijayakusuma environmentalsocialandgovernanceesgperformanceandearningsmanagementtheroleofgenderdiversity |