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The Moderating Effect of Board Diversity on the Environmental Disclosure and Earnings Management Relationship

Nov 2026 · Indian Journal of Corporate Governance · 0 citations · 88 references

Abstract

This study examines the moderating effect of board diversity on the relationship between corporate environmental disclosure (CED) and earnings management (EM) among 258 Bursa Malaysia-listed manufacturing companies from 2018 to 2023. Board diversity comprises gender diversity and accounting and financial competency. CED is measured using a 41-item content-analysis index, while EM includes accrual-based measures (Modified Jones and Kothari models) and real EM measures (abnormal production costs, operating cash flows and discretionary expenses). Using the generalised method of moments, the findings show that both board gender diversity and board competency significantly moderate the CED–EM relationship. Female board representation generally weakens the association between CED and accrual-based EM, although its effect on real EM vary across measures. Board competency also significantly conditions the relationship across accrual and real EM measures. The findings demonstrate that board composition shapes the relationship between environmental transparency and managerial reporting behaviour, and provide implications for strengthening corporate governance, reporting transparency and environmental accountability.

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