Unveiling the link between board gender diversity and energy firm’s performance in South Asia: the mediating role of earnings management

Majumder, Md. Tofael Hossain; Hamid, Mohamad Ali Abdul; Noordin, Bany Ariffin Amin; Al-Duais, Shaker Article Unveiling the link between board gender diversity and energy firm’s performance in South Asia: the mediating role of earnings management Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Majumder, Md. Tofael Hossain; Hamid, Mohamad Ali Abdul; Noordin, Bany Ariffin Amin; Al-Duais, Shaker (2024) : Unveiling the link between board gender diversity and energy firm’s performance in South Asia: the mediating role of earnings management, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-27, https://doi.org/10.1080/23311975.2024.2381088 This Version is available at: https://hdl.handle.net/10419/326449 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Unveiling the link between board gender diversity and energy firm’s performance in South Asia: the mediating role of earnings management Md. Tofael Hossain Majumder, Mohamad Ali Abdul Hamid, Bany Ariffin Amin Noordin & Shaker Al-Duais To cite this article: Md. Tofael Hossain Majumder, Mohamad Ali Abdul Hamid, Bany Ariffin Amin Noordin & Shaker Al-Duais (2024) Unveiling the link between board gender diversity and energy firm’s performance in South Asia: the mediating role of earnings management, Cogent Business & Management, 11:1, 2381088, DOI: 10.1080/23311975.2024.2381088 To link to this article: https://doi.org/10.1080/23311975.2024.2381088 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 25 Jul 2024. Submit your article to this journal Article views: 1503 View related articles View Crossmark data Citing articles: 2 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS | RESEARCH ARTICLE Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2381088 Unveiling the link between board gender diversity and energy firm’s performance in South Asia: the mediating role of earnings management Md. Tofael Hossain Majumdera,b , Mohamad Ali Abdul Hamida, Bany Ariffin Amin Noordinc and Shaker Al-Duaisd aPutra Business school, serdang, selangor, Malaysia; bDepartment of accounting and information systems, Comilla university, Cumilla, Bangladesh; cDepartment of accounting and Finance, Faculty of economics and Management, universiti Putra Malaysia, serdang, selangor, Malaysia; daccounting Department, Faculty of administrative sciences, ibb university, ibb, Yemen ABSTRACT This paper attempts to shed light on an analytical model that examines both direct relationship between board gender diversity and energy firms’ performance and an indirect connection in which earnings management is a mediating variable that is affected by the board gender diversity, which in turn affects the performance of energy firms. This study employs a dynamic panel model with the two-step system generalized methods of moments (system GMM) technique using 77 listed energy firms of South Asian emerging economies (i.e. Bangladesh, India, & Pakistan) covering from 2015 to 2019. The findings show that gender diversity significantly and positively impacts energy firms’ performance in South Asia. The study results also find that earnings management plays a complementary mediating role (i.e. partial mediation) in the association between gender diversity and energy firms’ performance. This research demonstrates the economic value of having female directors on corporate boards by strengthening companies’ governance structure and decreasing earnings management. On the issue of board gender diversity policy, this research offers vital practical information for South Asian regulators, particularly in the energy sector. The present study is a novel study on the emerging South Asian energy sector that contributes to the literature for the first time by exploring the nexus between board gender diversity and firm performance with the mediating role of earnings management, which the previous literature has overlooked. 1. Introduction One of the 17 Sustainable Development Goals the United Nations (UN) has set to accomplish by 2030 is SDG-5, i.e. gender equality and empowerment of women (Ding etal., 2022). UN SDG target 5.51 focuses on women’s equal opportunity and effective participation in leadership and decision-making at all economic, political, and public levels. Also, SDG 5.5.2 focuses on increasing the percentage of women in managerial positions. However, in a report by ILO in 2023,2 the gender gap has hardly improved during the past 20 years. The employment gap is particularly acute in developing nations, where 24.9% of women are unemployed, and this gap for men is 16.6%, which is alarmingly high but much lower than the rate for women. A 2023 update by Global Gender Report3 shows gender gap for economic participation and opportunity increases by 0.2% from 2022 to 2023. The statistics mentioned above raise the motivation to study gender diversity. Increasing the gender diversity of corporate boards is one strategy for engaging corporations in adopting sustainable practices (Naciti, 2019). However, the need for more diversity in corporate boardrooms has grown significantly over the last two decades (Lu et al., 2022; Oldford et al., 2021). Gender is a significant global concern that has garnered attention from national and international institutions such as Australia, Canada, Malaysia, Norway, South Africa, and the US. These institutions, including the World Bank, EU, and OECD, have issued recommendations on how to © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group CONTACT shaker al-Duais [email protected] accounting Department, Faculty of administrative sciences, ibb university, ibb, Yemen. this article was originally published with errors, which have now been corrected in the online version. Please see Correction (http://dx.doi.org/ 10.1080/23311975.2024.2407719) https://doi.org/10.1080/23311975.2024.2381088 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY Received 30 October 2023 Revised 8 July 2024 Accepted 9 July 2024 KEYWORDS Board gender diversity; firm performance; earnings management; accrual earnings management; energy firms; south Asia REVIEWING EDITOR Collins Ntim, University of Southampton, United Kingdom of Great Britain and Northern Ireland SUBJECTS Business, Management and Accounting; Finance; Industry & Industrial Studies 2 M. T. H. MAJUMDER ETAL. enhance the representation of gender minorities on corporate boards (Ntim & Soobaroyen, 2013). Numerous reforms have been implemented that provide a specific gender quota requirement (e.g. 40% in Norway, 50% in Quebec, Canada, 30% in Austria, 40% in France, at least 30% in Germany, 25% in Greece, at least 30% in Spain, 33% in Portugal, at least 1/3rd in Belgium, Italy, and Taiwan, at least one woman in India and South Korea).4 However, Asian countries lagged in this regard. For example, according to the report of Deloitte (2022),5 the global average of women directors on corporate boards is 19.7%, a slight increase of 2.8% from the last report published in 2019. The report also shows that the percentage of women directors on corporate boards in Asia (11.7%) is increasing but smaller than the world average (19.7%) and other parts of the world (for example, 24.3% in North America, 18% in the Caribbean, 30.7% in Europe, 29.9% in Australasia). Thus, there is a growing interest in researching gender diversity and how it impacts corporate outcomes in Asian countries. In the recent literature, numerous scholars emphasize the association between board gender diversity (BGD) and firm performance. Most studies between board gender diversity and firm performance are based on the developed economy. A recent systematic review by Laique et al. (2023) using 89 studies from 1996 to 2022 indicates that 66% of the studies were on the developed market perspectives, 29% on emerging economies, and the remaining 5% on global perspectives. The study also finds that the recent studies after 2015 indicate 44% of the studies regarding the BGD-performance relationship in emerging economies. Thus, the information suggests a growing interest in researching the association between BGD and performance in emerging economies in recent years. However, academics have not yet reached a unanimous conclusion regarding the connection between BGD and firm performance. Using a systematic review study, Laique etal. (2023) find that 57% of studies indicate positive, 24% show negative, 13% get evidence of no relation, and the remaining indicates the non-linear relationship between BGD and performance. For example, academicians find a positive association (Alodat et al., 2023; Amin etal., 2022; Boukattaya etal., 2022; Brahma etal., 2021; Chen etal., 2023), while other scholars find negative nexus (Ahmad et al., 2020; Ghafoor et al., 2022). Other studies find no association between board gender diversity and firm performance (Almarayeh, 2023; Marquez-Cardenas etal., 2022; Yarram & Adapa, 2024). The mixed and inconclusive findings of the previous research give the impetus to investigate this relationship further. Earlier studies advocated that the reasons behind the mixed and inconclusive findings between board gender diversity and firm performance are the effect of other factors, i.e. moderating or mediating factors (Hazaea etal., 2023). For example, researchers have looked at moderating factors, including corporate social responsibility (Jiang et al., 2021), institutional context (Post & Byron, 2015), ownership (Abdullah et al., 2016), intellectual capital (Farooq & Ahmad, 2023), corporate social responsibility (Ben Fatma & Chouaibi, 2023; Ghafoor et al., 2022; Jiang et al., 2021; Saleh et al., 2021), internationalization (Song et al., 2020), innovation (Cabeza-García et al., 2021), national governance quality (Nguyen et al., 2021), family firms (Amin, Ali, Rehman, et al., 2022; D’Amato, 2017), firm size (Li & Chen, 2018), and culture (Mohsni et al., 2021). Other scholars have looked at the mediating factor, such as sustainability disclosure (Alodat et al., 2023), green innovation (Mahsina & Agustia, 2023), board attendance (Joecks et al., 2023), intellectual capital (Ouni etal., 2022; Shahzad etal., 2020), agency cost (Khuong etal., 2022), corporate social responsibility (Boukattaya etal., 2022; Sial etal., 2018), political embeddedness (Teng etal., 2022), employment downsizing (Chen & Kao, 2022), working capital efficiency (Khan etal., 2020), innovation (Manita etal., 2020), managerial ability (Fernando et al., 2020), and board effectiveness (Martinez-Jimenez etal., 2020). In line with the earlier investigation and following the extant literature, this study claims earnings management can be a possible mediator in the relationship between board gender diversity and firm performance. The recent decades of growing literature in the field of accounting argued that earnings management has emerged as a central issue, notably after the bankruptcy of large corporations (e.g. Enron, WorldCom, and Xerox), which have been blamed for causing substantial damage to the global economy (Elzahaby, 2021). Many reasons exist for companies’ motivations to control earnings, including maximizing executive remuneration, boosting the price of seasoned offerings and initial public offerings, averting debt covenant breaches, preserving earnings stability, and minimizing tax burden (Yoon & Miller, 2002). As noted by Pham et al. (2019), managers have incentives to misrepresent accounting data (for example, earnings) to mislead accounting users about a firm’s financial performance or to generate personal benefits at the expense of shareholders. Prior studies have suggested that an effective corporate COGENT BUSINESS & MANAGEMENT 3 governance mechanism can decrease managerial incentives toward manipulating earnings, regulate the opportunism of insiders, and lessen information asymmetry (Chen et al., 2015; Pham et al., 2019). According to the agency theory, a more diverse board is better for shareholders because it strengthens oversight of management and better lines up the interests of shareholders with those of management (Orazalin, 2020). Along the same lines, Zalata et al. (2018) claim that the inclusion of female members on the board enhances board independence and monitoring capability, increasing the financial reporting quality by lessening earnings manipulation. Supporting the resource dependence view, Ntim (2015) argues that female board member’s skills, expertise, and experiences are vital resources and help to reduce earnings manipulation of the organisation. Several studies find a negative association between BGD and earnings management (Borralho et al., 2020; Orazalin, 2020; Saona et al., 2020). Hence, on the one hand, board gender diversity may reduce earnings management; on the other hand, many scholars find that the quality of earnings may positively affect firm performance (Bouaziz et al., 2020; Dakhlallh et al., 2020; Kumar et al., 2020). It is worth mentioning that the existing literature on board gender diversity, earnings management, and firm performance has focused on (i) the direct effect of board gender diversity on firm performance, (ii) the direct effect of board gender diversity on earnings management; (iii) the direct effect of earnings management on firm performance, separately. Existing research, however, has not examined the potential indirect association between board gender diversity and firm performance through earnings management. Against this backdrop, this research attempts to fill the knowledge gap in the existing corporate governance literature by investigating the following specific research questions: RQ1. Does gender diversity matter for energy firms’ performance in the South Asian emerging economies? RQ2. To what extent does earnings management mediate the effects of gender diversity on the energy firm’s performance? By answering the above research questions and building on both the agency theory and the resource dependence theory, this study seeks to add to the existing literature on the energy sector in South Asian emerging economies by investigating whether board gender diversity (BGD) directly affects firm performance and indirectly affect through earnings management. Using 77 listed energy firms from South Asian emerging economies (Bangladesh, India, and Pakistan), this study uses a dynamic panel model using the two-step system generalised methods of moments (system GMM) technique covering the period from 2015 to 2019. The results demonstrate that gender diversity has a significant and positive effect on the performance of energy firms in South Asia. The study’s findings also indicate that the relationship between gender diversity and the performance of energy firms is partially mediated through earnings management. The present study contributes to the existing literature in several ways. First, we extend the boundaries of the existing literature on the association between board gender diversity and firm performance by including the mediation effects of earnings management on the relationship. More precisely, our study extends the works of Saleh etal. (2020), Feviana & Supatmi (2021), Istianingsih (2021), Kang & Kim (2011), Latif (2018), Latif et al. (2017), Mahrani & Soewarno (2018), Nuryantini (2022), Quddoos, Akhtar, et al. (2020), Quddoos, Ullah, et al. (2020), Savitri et al. (2020), and Asghar et al. (2020), who have examined the mediating role of earnings management in the association between corporate governance and firm performance but not considered board gender diversity as a mechanism of corporate governance. Second, we investigate the energy sector, where earlier studies paid less attention to the board gender diversity research to attain the objectives of SDG-5. Laique etal. (2023) argue that the effect of BGD on a company’s financial performance varies by industry, taking gender-specific talents into account. For instance, Frink etal. (2003) find that gender-diverse boards work better in the service sector than in the small-scale and large-scale manufacturing sectors. Third, although previous research mainly focuses on single-country perspectives (Zhang, 2020), we consider a sample of multiple countries collectively from South Asian emerging economies, where firms are mainly dominated by concentrated ownership, i.e. the existence of more family firms. Laique etal. (2023) suggest that future investigations use various samples from multiple aspects to fully understand the BGD-performance relationship. Also, the study of Amadi et al. (2023) suggest that the future study on the relationship between BGD-performance should focus 4 M. T. H. MAJUMDER ETAL. on emerging and developing nations. Fourth, we present strong findings by using both the Blau index and the Shannon index to assess the influence of gender diversity on company performance, unlike previous research that is largely focused on the presence/absence or number or the percentage of one gender category in the group. We are motivated to use the Blau and Shannon index from the study of Simionescu etal. (2021), which suggests using these two diversity measures in future research. Fifth, the study considers the endogeneity issues between board gender diversity and firm performance, ignoring it gives biased results (Maji & Saha, 2021), which were not addressed by the many earlier studies (Amin et al., 2022; Jyothi & Mangalagiri, 2019; Kumar et al., 2020; Sanan, 2016). Laique etal. (2023) opine that there is a complex and non-linear relationship between BGD and the company’s performance. Consequently, it is essential to address endogeneity and reverse causality when investigating the relationship between BGD and firm performance. We have used a two-step system generalized method of moments (GMM) technique to control for endogeneity. Sixth, this study uses Zhao et al. (2010) techniques for the mediation analysis, which is rarely used in the panel data analysis. In contrast, the recent studies (Alodat et al., 2023; Boukattaya et al., 2022) published in scholarly journals use Baron & Kenny (1986) and Sobel (1982) models for the mediation analysis, those are obsolete and face much criticism from renowned scholars.6 Our study uses the med sem command in Stata, which uses Zhao etal. (2010) strategy. Thus, adopting this mediation technique extends the existing literature and contributes to future research. Finally, the study shows robust evidence by employing an alternative regression technique (fixed-effect model) and both the accounting and market-based measures of firm performance. Laique et al. (2023) opine that the heterogeneity in the inferences of the earlier studies is due to the different measures of firm performance and methodologies used. The organization of this article is as follows. The next section presents a review of the literature, theoretical underpinnings, and formulation of research hypotheses, followed by a research methodology. The regression models and their associated findings are then presented, followed by concluding marks indicating a summary of the results, implications, limitations, and future research avenues. 2. Background The institutional setting of previous studies is a crucial reason that may have contributed to ambiguous findings (Ramadan & Hassan, 2022). The institutional environment in emerging economies is different from that in developed countries because it is weaker (declining market efficiency), more dynamic (rapid-growth countries), and diverse (a wide range of cultural, philosophical, and religious traditions) (Oehmichen, 2018), research on this context may provide innovative insights. Among the emerging economies, the South Asian emerging economies are the key laboratory as the majority shareholders or family ownership mainly controls most of the companies in this region, and there is a weaker presence of the corporate governance elements compared to the other areas (Farooque et al., 2007; Majeed et al., 2015; Malik & Kanwal, 2018; Masud et al., 2018). However, our study mainly focuses on the three countries (Bangladesh, India, & Pakistan) of the South Asian economies. According to the World Bank Database, these three countries contribute 95.95% to the GDP and hold 85.19% of the population in the SA region.7 In the present study, we focus on the energy sector of South Asian economies. A report prepared by the International Finance Corporation (IFC) and the International Energy Agency (IEA) (2023)8 noted that to fulfil rising energy demands and achieve the climate targets outlined in the Paris Agreement, annual renewable energy investments in emerging and developing nations will need to more than quadruple from $770 billion in 2022 to as much as $2.8 trillion per year by the early 2030s. The report also indicates that emerging and developing Asian countries need to invest approximately 500 billion USD in annual clean energy investment to meet SDGs and climate goals. These statistics show the importance of investigating the energy sector from the perspectives of the South Asian (SA) emerging economies. South Asian economies include eight countries: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan, Bhutan, and Nepal have not adopted corporate governance codes. Maldives and Bhutan have few listed firms, and there are very few energy firms. No firms are listed yet on the Afghanistan Stock Exchange. Given the above facts, this study mainly focuses on Bangladesh, India, and Pakistan. The initial implementation of the CG code in Bangladesh’s capital market occurred in 2006, adopting a ‘comply or explain’ strategy (Islam etal., 2022). In light of companies’ apparent reluctance to adhere to the lax regulations and the reported lack of compliance with certain COGENT BUSINESS & MANAGEMENT 5 overstatements (Islam etal., 2020), the regulatory body overseeing the capital market in Bangladesh, the Bangladesh Securities and Exchange Commission (BSEC), revised the guidelines in 2012 to enforce the stipulations. In 2018, the third edition of the code was examined and amended by BSEC after a period of six years (Islam et al., 2022). However, there is no mandatory or legal requirements for appointing female board member in the new corporate governance code of Bangladesh.9 In India, the formation of the Securities and Exchange Board of India (SEBI) in 1992 was a direct response to the economic instability that India witnessed in 1991. At first, SEBI’s main goal was to oversee and control the securities industry. Nevertheless, the organization promptly acknowledged the significance of implementing Corporate Governance (CG) changes and commenced actively pursuing them as an integral component of its regulatory mandate (Wasdani etal., 2021). The inception of Corporate Governance (CG) in India can be traced back to 1999, when the Confederation of Indian Industry (CII) assumed a prominent role in its implementation. This code established explicit criteria for organisations, with a specific emphasis on areas such as accounting transparency and disclosure methods, in accordance with international norms (Wasdani et al., 2021). Currently, the supervision of Corporate Governance (CG) in India is effectively administered by the Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA). The modified Companies Act of 2013 is a significant legislative measure that establishes more stringent corporate governance rules, namely in relation to the areas of disclosures, transparency, and norms (Arora & Bodhanwala, 2018). The implementation of the Companies Act of 2013 brought forward regulations mandating the presence of women and independent directors on the boards of Indian firms. The requirements in question are outlined in Section 149 of the Act, in conjunction with the Companies Rules (Appointment and Qualification of Directors) 2014. Furthermore, the Securities and Exchange Board of India (SEBI), the regulatory body overseeing the Indian market, has taken action by imposing a need for the inclusion of at least one female director who is independent in the top 500 listed businesses (Nigam et al., 2022). This requirement will be enforced from April 2019 onwards, and will be extended to the top 1,000 companies by March 2020. The implementation of these legislative measures has significantly influenced the operational dynamics of Indian firms. These circumstances have effectively compelled a transformation in corporate governance methodologies. Currently, there is an increasing inclination towards undertaking research to evaluate the impact of gender diversity in boardrooms on the success of companies operating within the Indian corporate environment (Nigam et al., 2022). In Pakistan, the Securities Exchange Commission of Pakistan (SECP) adopted the first Corporate Governance (CG) code in 2002, which became obligatory for all Pakistani listed companies (Tariq & Abbas, 2013). The 2002 CG code underwent revision in 2012, following a decade of implementation. This revision involved the incorporation of more stringent provisions pertaining to the board committees, board of directors, and compliance clauses (Khan etal., 2022). However, there are no regulatory requirements regarding the appointment of female directors to the board in the CG codes of 2002 and 2012. The SECP implemented a compulsory gender quota through the Pakistani Companies Act 2017, which mandates that corporations must designate a minimum of one female member to their board.10 Thus, there is a growing interest how this gender quota impacts on Pakistani firms. 3.Theoretical literature review The board of directors’ main responsibilities are to (a) oversee and control management, (b) advise management, (c) ensure legal and regulatory compliance, and (d) link the firm to the external environment (Abdullah, 2014). Due to the inherent complexity of the interplay between gender diversity on boards and corporate performance, it is impossible to investigate this nexus using a single theory (Laique et al., 2023). Most of the standalone theories have serious flaws, including a failure to account for important contextual factors, an overemphasis on the interests of financial stakeholders, a tendency toward managerial mistrust and power abuse, and so on (Sarhan et al., 2019). However, when more than one theory is combined, their ability to explain phenomena is greatly increased (Ntim etal., 2015). A recent systematic review of Hazaea et al. (2023) examine the association between board gender diversity (BGD) and firm performance using 152 studies from the Web of science and Scopus database. The study finds that agency theory is the dominant theory (53% of studies used this theory) to represent the BGD-performance relationship, followed by the resource dependence theory (39%) and other theories used by only 8% of studies. Using a systematic review study of 634 studies, Nguyen et al. 6 M. T. H. MAJUMDER ETAL. (2020) also find that agency theory is the dominant theory to examine the impact of women on corporate boards on financial and non-financial performance. Another systematic review by Laique et al. (2023) also finds that agency and resource dependence theories are dominance theories to explain the BGD-performance relationship, and the study results show that 53% of the studies used these two theories. Thus, this study explains the BGD-performance nexus from the perspectives of agency and resource dependence theories in line with other studies (Arora, 2021; Marquez-Cardenas et al., 2022; Ramadan & Hassan, 2022). 3.1. Agency theory The agency theory examines the inherent conflicts of interest between principals, such as shareholders, and agents, such as managers. In this context, the board of directors plays a crucial role in mitigating and resolving these conflicts (Fama & Jensen, 1983; Jensen & Meckling, 1976). As per the abovementioned theory posited by Brahma et al. (2021), including women on a board with diverse composition enhances monitoring capabilities and mitigates agency costs. Supporting the agency view, Arora (2021) contends that the presence of a higher number of women on a company’s board of directors leads to a reduction in agency costs. Female directors are more inclined to enhance board independence by incorporating diverse perspectives and ideas. In the same vein, Liao et al. (2015) argue that there are notable cultural, societal, and individual differences between men and women. In light of this, it is crucial to emphasise the importance of gender diversity among board members. Furthermore, the inclusion of individuals from various backgrounds, both male and female, on the boards contributes to a wide range of ideas, information, perspectives, and experiences during the decision-making process. This diversity aids in the execution of strategic functions such as advising and monitoring, ultimately leading to an improvement in business performance (Khosa, 2017; Ntim, 2015). Moreover, women are often regarded as being more progressive, displaying a greater willingness to collaborate with others, and exhibiting less self-centeredness compared to men (Pucheta-Martínez & Gallego-Álvarez, 2019). Consequently, the incorporation of women into boards of directors contributes to a more balanced allocation of skills and characteristics among board members, enhancing the autonomy of the board and the quality of managerial supervision (Jizi, 2017), which, in turn, fosters heightened levels of transparency and accountability concerning both financial and non-financial affairs (Shamil etal., 2014). Because the agency problem could affect the company’s performance and valuation, it is vital to investigate whether gender diversity reduces agency costs (Chen & Hassan, 2022). In summary, the agency theory supports the notion that women’s presence on corporate boards is associated with enhanced decision-making capabilities and heightened profitability. 3.2. Resource dependence theory According to resource dependence theory, a firm can be sustainable when it links with the external environment (Pfeffer & Salancik, 2003). The theory further emphasises that the board of directors is the cornerstone for the firm to access external resources such as human and financial capital, quality information, technology, etc. (Kiel & Nicholson, 2003). According to this line of thinking, boards with a high degree of diversity are superior to boards with a low degree when offering and obtaining access to essential external resources for running businesses. A board of directors of both sexes can benefit from access to various information, viewpoints, knowledge, and abilities (Arvanitis etal., 2022). Supporting the resource dependence theory, Ntim (2015) also argues that the board’s diversity can impact the firm by providing valuable resources (such as experiences, legitimacy, prestige, and skills) from the external environment, which is also mentioned in the study of Arora (2021). Furthermore, several existing studies argue that the existence of women on board enhances a firm financial position, mainly because of their quality decision-making power (Bart & McQueen, 2013), their better records of attendance in the board meetings compared to males (Huse & Solberg, 2005), their public image, creativity, and better knowledge regarding the market conditions (Smith etal., 2006), and their quality of listening and communication skills (Julizaerma & Sori, 2012). To summarise, the resource dependence theory suggests that increasing the percentage of female directors on corporate boards is essential to improving corporate performance since doing so can improve an organisation’s access to critical external resources. COGENT BUSINESS & MANAGEMENT 7 4. Empirical literature review and hypotheses development 4.1. The effects of board gender diversity on firm performance The prior empirical studies provide mixed and inconclusive findings. Numerous scholars find a positive impact of the presence of women directors on firm performance (Ahmadi etal., 2018; Alodat etal., 2023; Amin et al., 2022; Arora, 2021; Assenga et al., 2018; Boukattaya et al., 2022; Brahma et al., 2021; Chen etal., 2023; Green & Homroy, 2018; Ramadan & Hassan, 2022; Tahir etal., 2021). In contrast, some scholars find a negative association (Ahmad et al., 2020; Ghafoor et al., 2022). Some scholars conclude no association (Almarayeh, 2023; Marquez-Cardenas etal., 2022; Yarram & Adapa, 2024). The recent study of Chen et al. (2023) find the positive impact of BGD on Taiwan’s firm performance. The study argues that female directors work as effective monitors in a weak corporate governance environment, and the study encourages the inclusion of more females on the board. In another recent study of the Indian environment, Chatterjee & Nag (2023) note that only when sufficient female participation on corporate boards can it significantly impact a firm’s financial success. A study by Alodat et al. (2023) in the Jordanian context finds a positive impact of women directors on firm performance. The study opines that women’s participation on boards of directors can improve a company’s bottom line by sparking new approaches to problems and helping the board maintain a competitive edge. Using the sample of 369 (comprising 3332 firm-year observations) listed on the Standard and Poor’s 500 in the US from 2004 to 2015, Đặng et al. (2020) examine the influence of board gender diversity on firm performance. The study concludes that the female members on board significantly and positively influence the firm performance. Another recent study by Song et al. (2020) investigates the impact of board diversity on firm performance with the moderating effects of internationalisation using publicly traded lodging companies in the US from 1993-2018. The study finds significant positive impacts of gender diversity on firm performance. Using 73 listed firms in the context of Saudi Arabia Shukeri & D Alfordy (2022) find that the female presence in the corporate board does not affect firm performance. The study also argues that the reason behind the no impact on firm performance is the lower number of females on corporate boards, which is only 8.1% of firms, and most of the firms are controlled by family firms. Overall, taking into account the fact that the fundamental qualities of women that are supported by the two theories (agency and resource dependence theories) can be maintained in any given institutional environment and the presence of women on the board as a whole can be taken as a sign of better governance. Considering this, the following is the hypothesis for this investigation: H1: Board gender diversity has a positive impact on energy firm’s performance in South Asia. 4.2. Gender diversity, earnings management, and firm performance The effectiveness of corporate governance depends on the board of directors, who approves and evaluates the firm’s investment and financing activities (Detthamrong et al., 2017). Strong or weak corporate governance in a firm may increase or decrease the manager’s opportunistic behaviour, including earnings management. According to the agency view, managers work for their self-interest rather than the owner’s interest to get incentives from the firms, which creates agency conflict (Jensen & Meckling, 1976). Good board governance can minimise the agency conflict that leads to firm performance (Puni & Anlesinya, 2020). In this point of view, the diversity of gender, i.e. the female members’ existence on the board, prevents unethical activities as they are considered more ethical and socially responsible (Wahid, 2019). The inclusion of female members on the board also increases the board’s independence and monitoring capability, which ultimately reduces EM and improves the firm financial reporting quality (Zalata et al., 2018). Using discretionary accruals as a proxy for management opportunism, (Zalata et al. (2019) find evidence that female directors in monitoring roles reduce such behavior. Supporting the resource dependence view, Ntim (2015) argues that female board member’s skills, expertise, and experiences are vital resources and help to reduce earnings manipulation of the organisation. Thus, from the above discussion, it is apparent that board gender diversity can reduce the managers’ opportunistic behaviour, including earning manipulation, by providing valuable resources and establishing an effective monitoring system for the firms. Moreover, because of the decline, the earnings manipulation by the managers induces them to increase the firm’s profit by expanding its operational activities 14 M. T. H. MAJUMDER ETAL. 6.2. Correlations Table 4 presents the Pearson’s correlations among the study variables. As a rule of thumb, multicollinearity is an issue when the absolute value of correlation between two independent or control variables is 0.70 or higher (Liu et al., 2014). Table 4 indicates the highest value of correlation in this study lies between leverage (LEV) and return on assets (ROA) is -0.44, which is below the cut-off score of 0.70. Thus, the problem of multicollinearity is not a serious issue for this investigation. 6.3. The effects of gender diversity on firm performance Table 5 shows the empirical results from Equation (6) with the two proxies of firm performance, i.e. both the accounting (ROA) and market (Tobin’s Q) measures and five proxies of gender diversity, namely, number of women directors on board (NWD), percentage of women directors on board (PWD), presence of women directors on board (DWD), Blau index of gender diversity (BLGD), and Shannon index of gender diversity (SGD). As shown in Table 5, the system GMM is our baseline model in this study. The results of Hansen J-statistic (reported in Table 5) confirm the validity of the over-identifying restrictions and the justifications for choosing the system GMM. The F-statistic value is significant for all models in Table 5, indicating that the model has predictive power. Consequently, all the requirements of GMM are met, and the findings are credible. In addition, the test results (reported in Table 5) of AR(1) and AR(2) indicate that autocorrelation exists in the first order but not in the second order. According to the findings shown in Table 5, the coefficient of one-year lagged performance (FPMijt-1) demonstrates statistical significance and a positive relationship across all models. This suggests that for the firms included in the sample, there is a considerable impact of the previous year’s financial performance on the current year’s performance. This finding aligns with recent research (See, e.g. Đặng etal., 2020; Wintoki etal., 2012) and other studies, which indicate that it is crucial to incorporate past financial performance as a significant factor to account for the dynamic nature of the relationship between board gender diversity and firm performance. The results displayed in Table 5 demonstrate a statistically significant and positive correlation between various measures of board gender diversity (NWD, PWD, BLGD, SGD) and return on assets (ROA). Furthermore, a noteworthy and statistically significant positive correlation has been seen between proxies for board gender diversity, namely PWD, BLGD, SGD, and Tobin’s Q. The impact of DWD on both ROA and Tobin’s Q is statistically insignificant. Therefore, the null hypothesis (H1) is accepted. This finding suggests that having more women Table 3. Descriptive statistics. Full sample Bangladesh india Pakistan Variables Mean sD Min Max Mean sD Min Max Mean sD Min Max Mean sD Min Max Main Variables Firm performance Roa (%) 8.99 11.44 −15.12 88.00 5.17 6.59 −15.12 26.41 9.70 12.60 −0.32 74.00 10.70 12.10 −0.19 88.00 tQ 2.30 1.67 0.12 16.78 1.89 1.15 0.12 9.74 2.27 1.62 0.17 13.68 2.58 1.92 0.67 16.78 Earnings Management aeM 0.04 0.62 −1.05 5.04 0.001 0.09 −0.79 0.31 0.004 1.01 −1.05 5.04 0.09 0.11 0.002 0.83 Gender Diversity nWD 0.63 0.89 0.00 4.00 0.98 1.23 0.00 4.00 0.44 0.68 0.00 4.00 0.59 0.73 0.00 3.00 PWD (%) 5.97 11.52 0.00 66.69 11.03 18.05 0.00 66.67 4.73 7.48 0.00 55.69 4.00 8.00 0.00 43.00 DWD 0.36 0.46 0.00 1.00 0.49 0.51 0.00 1.00 0.36 0.49 0.00 1.00 0.28 0.36 0.00 1.00 BLgD 0.16 0.20 0.00 0.49 0.13 0.16 0.00 0.44 0.18 0.23 0.00 0.49 0.17 0.19 0.00 0.49 sgD 0.23 0.17 0.00 0.69 0.21 0.24 0.00 0.63 0.25 0.11 0.00 0.69 0.22 0.17 0.00 0.68 Control Variables BsZ 9.05 2.70 3.00 22.00 9.87 3.67 5.00 19.00 9.63 2.68 3.00 22.00 8.00 1.31 6.00 15.00 BinD (%) 31.47 18.58 0.00 93.00 18.62 7.86 0.00 33.33 48.70 11.75 0.00 86.00 23.22 16.30 0.00 93.00 BMt 7.95 4.16 2.00 27.00 11.43 6.07 4.00 26.00 8.46 2.27 2.00 27.00 5.32 1.38 3.00 14.00 oWnC (%) 42.22 19.77 14.50 78.29 27.45 9.67 14.50 66.75 65.63 5.29 32.00 78.29 29.33 9.99 16.76 77.93 LeV 0.39 0.24 0.01 0.93 0.49 0.25 0.03 0.93 0.24 0.17 0.01 0.88 0.48 0.22 0.01 0.89 FsiZe 12.72 3.81 5.75 26.06 9.83 1.85 5.75 12.15 10.12 1.35 6.44 15.34 16.97 1.93 13.90 26.06 Fage 3.29 0.87 0.71 5.03 2.43 0.67 1.09 3.76 3.67 0.63 1.08 5.03 3.46 0.82 0.71 4.69 obs. 351 85 129 137 note: sD = standard deviation; Min = Minimum value; Max = Maximum value; obs. = total firm-year observations. the elaboration and definitions of all the variables are presented in table 2. COGENT BUSINESS & MANAGEMENT 15 Table 4. Pearson correlation matrix. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Roa 1 tQ 0.328*** 1 aeM −0.08*** −0.021** 1 nWD 0.125* 0.116* −0.121* 1 PWD 0.217*** 0.197*** −0.112** 0.013** 1 DWD 0.015 0.001* −0.121 0.001 0.002* 1 BLgD 0.256*** 0.315*** −0.132** 0.121** 0.118* 0.005 1 sgD 0.242** 0.276*** −0.085* 0.115** 0.082** 0.003* 0.062*** 1 BsZ 0.091*** 0.076** −0.082*** 0.248** 0.189** 0.011*** 0.146** 0.132** 1 BinD 0.116*** 0.142*** −0.012*** 0.321*** 0.215** 0.015** 0.183*** 0.161** 0.251*** 1 BMt 0.224*** 0.184** −0.081** 0.176*** 0.139*** 0.112** 0.092*** 0.084* 0.194*** 0.163** 1 oWnC 0.184* 0.163 −0.116** 0.112** 0.083* 0.063* 0.072** 0.057* 0.182** 0.178* 0.222** 1 LeV −0.44*** −0.333** 0.052 0.08** 0.061** 0.058 0.053* 0.041*** 0.031* 0.004* 0.001** 0.051* 1 FsiZe 0.198* 0.205** −0.116 0.012* 0.011* 0.012 0.011* 0.019 0.042** 0.031** 0.139* 0.182** 0.217* 1 Fage −0.052 −0.069 −0.181*** 0.021* 0.025* 0.036* 0.029 0.031* 0.085 0.162* 0.127 0.136* −0.07 0.118** 1 note: *** there is significant correlation at the 1% level (2-tailed); **there is significant correlation at the 5% level (2-tailed); *there is significant correlation at the 10% level (2-tailed). 16 M. T. H. MAJUMDER ETAL. on the board can boost a company’s success, consistent with other studies (Alodat etal., 2023; Amin etal., 2022; Boukattaya et al., 2022; Brahma et al., 2021; Chen et al., 2023). Our findings align with the agency theory, which suggests that the conflict of interests between managers and owners can be solved through the proper monitoring skills by employing more women on corporate boards (Amin et al., 2022). The study’s findings also align with the resource dependency theory, which states that female board members are valued for the knowledge, experience, and perspective they bring to the boardroom table (Siciliano, 1996). The findings of our study also align with the perspective put forth by Boukattaya etal. (2022), which posits that augmenting the representation of women on corporate boards enhances the board’s resource base. This is attributed to the unique experiences and skills that women directors bring, distinct from their male counterparts. Consequently, such diversity fosters the cultivation of broader perspectives and encourages multi-faceted thinking that is expected to optimise the board’s functioning and subsequently enhance the company’s performance. Other researchers (e.g. Arora, 2021; Ramadan & Hassan, 2022) also find similar results using resource dependency theory. In conclusion, women directors have the ability to improve a company’s performance by participating in board meetings and bringing a range of strategies for maintaining a competitive advantage. Regarding control variables, our results show that board size (BSZ), board independence (BIND), board meetings (BMT), and firm size (FSIZE) significantly and positively impact both measures of firm performance (ROA, Tobin’s Q). In contrast, leverage (LEV) has found significant negative impacts on ROA and Tobin’s Q. However, firm age (FAGE) has found significant positive impacts only on ROA but not on Tobin’s Q. In addition, Ownership concentration (OWNC) has no significant effect found on both ROA and Tobin’s Q. Table 5. the effects of gender diversity on firm performance (using system gMM). Variables Roa tobin’s Q M1 M2 M3 M4 M5 M1 M2 M3 M4 M5 FPM ijt-1 0.283* 0.436*** 0.108* 0.521** 0.643*** 0.231** 0.334*** 0.112* 0.554*** 0.663*** (1.78) (4.95) (1.76) (2.36) (8.88) (2.58) (4.56) (1.81) (8.36) (9.98) nWD 0.023* – – – – 0.012 – – – – (1.71) (1.11) PWD – 0.098*** – – – – 0.093*** – – – (4.69) (4.11) DWD – – 0.031 – – – – 0.043 – – (1.23) (1.07) BLgD – – – 0.086** – – – – 0.078*** – (2.57) (3.35) sgD – – – – 0.095** – – – – 0.087** (2.42) (2.58) BsZ 0.081** 0.088*** 0.067** 0.089*** 0.091** 0.066* 0.092*** 0.043* 0.095*** 0.086** (2.32) (4.13) (2.24) (3.38) (2.22) (1.84) (4.67) (1.78) (3.05) (2.37) BinD 0.012* 0.045*** 0.006* 0.076*** 0.034** 0.001* 0.054** 0.003* 0.087** 0.074*** (1.72) (4.13) (1.76) (3.82) (2.42) (1.89) (2.33) (1.91) (1.98) (4.04) BMt 0.002 0.021** 0.011* 0.034** 0.032* 0.001 0.014*** 0.001* 0.056*** 0.043* (0.98) (2.36) (1.77) (2.12) (1.94) (0.87) (4.74) (1.67) (6.78) (1.93) oWnC 0.001 0.002 0.003 0.011 0.008 0.004 0.007 0.012 0.009 0.007 (1.09) (0.99) (0.76) (1.11) (0.97) (1.08) (1.09) (0.56) (0.99) (1.12) LeV −0.051* −0.099** −0.043* −0.093** −0.076** −0.043* −0.097* −0.021* −0.084** −0.091** (-1.88) (-2.14) (-1.92) (-2.43) (-1.99) (-1.75) (-1.74) (-1.81) (-2.55) (-2.12) FsiZe 0.021 0.032** 0.015 0.034*** 0.042** 0.013 0.047** 0.009 0.044** 0.037* (1.21) (2.17) (1.09) (2.76) (2.43) (0.86) (2.36) (0.54) (2.32) (1.88) Fage 0.003 0.032* 0.003 0.045** 0.031* 0.003 0.002 0.014 0.023 0.009 (1.15) (1.71) (1.13) (2.26) (1.78) (0.32) (0.21) (0.86) (1.14) (0.75) time dummies Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Country dummies Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Constant 6.09* 9.06** 7.88 10.23** 8.99*** 5.76* 9.20*** 3.65* 8.85*** 7.87* (1.69) (2.58) (1.08) (2.31) (3.81) (1.88) (6.89) (1.75) (3.56) (1.69) F statistic 158.23* 243.76*** 166.61* 278.59*** 345.32** 150.04* 256.54** 147.89* 302.64*** 423.76*** Hansen J-statistic (p value) 0.391 0.367 0.289 0.442 0.423 0.442 0.406 0.325 0.548 0.469 aR(1) p value 0.030 0.026 0.032 0.013 0.039 0.031 0.028 0.036 0.011 0.041 aR(2) p value 0.298 0.412 0.364 0.445 0.189 0.317 0.434 0.371 0.478 0.222 no. of observations 351 351 351 351 351 351 351 351 351 351 note: the values in parentheses indicate heteroscedasticity-robust t-statistics. *, **, *** denote significance at 10%, 5%, and 1% levels respectively. COGENT BUSINESS & MANAGEMENT 17 6.4. The mediating effect of earnings management Table 6 represents the mediation effect in line with the Zhao et al. (2010) mediation strategies, as Figure 1 explain. The findings indicate that among the five proxies of gender diversity, only the percentage of women directors on the board has a significant direct and indirect effect on firm performance (ROA and Tobin’s Q), indicating that partial mediation exists here. We further see that the direction of direct effects (c’= 0.098 for ROA and 0.093 for Tobin’s Q) and indirect effects (ab = 0.0057 for ROA and ab = 0.0055 for Tobin’s Q) show the same direction which indicates that there are complementary mediation effects of earnings management in the association between gender diversity and firm performance. This study further calculated the size of the direct and indirect effects of gender diversity on firm performance by following the previous study of Zhao et al. (2010). We find that the impact of gender diversity on firm performance mediated through earnings management is 5% and 7% of the total effects, respectively, for both ROA and Tobin’s Q proxies. We further find that the mediation effect through earnings management is 0.06 times larger than the direct effect of gender diversity on firm performance measured by ROA and Tobin’s Q. 6.5. Robustness analysis This study ensures the robustness of the findings by including both accounting and market measures of firm performance. Also, the study applies an alternative regression technique (fixed effect regression) using a static panel model. The p-values (not reported) of both the Chow test and Breusch-Pagan LM tests reject the null hypothesis, indicating using either fixed effect or random effect regression techniques. To choose between fixed or random effect regression, the Hausman fixed or random (F/R) test (not reported) results confirm that fixed effect is the appropriate technique among the Pooled OLS, fixed effect, and random effect regression. The findings are similar to GMM results (not presented here to save space, but available from authors). 7. Summary and conclusion 7.1. Summary In this paper, paying attention to SDG-5 and drawing on agency and resource dependence theories, we have examined whether earnings management mediates the association between board gender diversity and energy firms’ performance in South Asian emerging economies. The study uses five proxies of gender diversity (Number of women directors on board, percentage of women directors on board, presence of women directors on board, Blau index of gender diversity, and Shannon index of gender diversity) and two proxies of firm performance, i.e. both the accounting (ROA) and market (Tobin’s Q) measures. This paper measures earnings management by using the proxy of accrual earnings management. Using a total of 77 energy firms from three countries of SA emerging economies (Bangladesh, India, and Pakistan), the study finds that gender diversity on energy firms’ boards directly and positively impacts firm performance. We also find that earnings management mediates (complementary mediation) in the BGD-performance relationship. The complementary mediation indicates the same direction of direct effects and indirect effects. In our case, like the positive direct effects of the BGD-performance relationship, we also find the positive indirect effects because BGD reduces earnings management and, in turn, lower earnings management increases firm performance. Therefore, this study can conclude that through the reduction of earnings management, women on boards positively impact South Asian energy firms’ performance. Our evidence supports agency theory and resource dependence theories, which argue that more women on boards can boost legitimacy, monitoring, decision-making, and access to scarce external resources, all beneficial to a company’s financial performance. 7.2. Implications The results of this investigation offer valuable theoretical and policy implications. While several studies have investigated the relationship between board gender diversity and firm performance (Ahmadi et al., 2018; Alodat et al., 2023; Amin et al., 2022; Arora, 2021; Assenga et al., 2018; Boukattaya et al., 2022; 18 M. T. H. MAJUMDER ETAL. Table 6. the mediation effects of earnings management. estimates Monte Carlo (Dependent variable: Roa) Monte Carlo (Dependent variable: tobin’s Q) M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 indirect effect 0.0007 0.0057** 0.0016 0.0002 0.0011 0.0003 0.0055** 0.0004 0.0015 0.0011 standard error 0.0005 0.0022 0.0013 0.0002 0.0009 0.0003 0.0024 0.0003 0.0011 0.0011 Z-value 1.38 2.58 1.25 1.09 1.19 1.05 2.32 1.11 1.34 1.02 indirect effect/ total effect 0.03 0.05 0.05 0.002 0.01 0.03 0.07 0.008 0.02 0.01 indirect effect/ Direct effect 0.03 0.06 0.05 0.002 0.01 0.03 0.06 0.008 0.02 0.01 (Zhao et al., 2010) output approach Direct only (non mediation) Complementary mediation (partial mediation) no effect (non mediation) Direct only (non mediation) Direct only (non mediation) no effect (non mediation) Complementary mediation (partial mediation) no effect (non mediation) Direct only (non mediation) Direct only (non mediation) note: M1 to M5 indicates result for the effect of different proxies of gender diversity i.e. nWD, PWD, DWD, BgD, and sgD respectively on firm performance (Roa) by considering eM as mediator in the relationship, whereas M6 to M10 also indicates the same meaning like M1 to M5 except tobin’s Q is the proxy of firm performance instead of Roa. *, **, *** denote significance at 10%, 5%, and 1% levels respectively. COGENT BUSINESS & MANAGEMENT 19 Brahma et al., 2021; Chen et al., 2023; Green & Homroy, 2018; Ramadan & Hassan, 2022; Tahir et al., 2021), as well as earnings management (Borralho etal., 2020; Orazalin, 2020; Saona etal., 2020), there is a dearth of research focusing on the mediating effect of earnings management on the BGD-performance relationship. By providing empirical evidence, this study addresses a theoretical gap in existing literature. It suggests that having more female directors in the boardroom broadens the perspective and that different skill sets, morals, ideologies, and problem-solving techniques might help handle the opportunistic behaviour (e.g. earnings management) of managers. This could be linked to increased board productivity and problem-solving abilities, improving firm performance. This study provides practical ramifications in addition to its theoretical contributions. Policymakers should improve the governance system by including more women on the board of directors so that good governance reduces earnings manipulations, improving firm performance. It is observed that energy corporations in India and Pakistan adhere to regulatory requirements by appointing at least one female member to their corporate boards. However, it is noteworthy that a significant majority of these firms appoint only one female member, suggesting the presence of tokenism in their compliance efforts. Also, in Bangladesh, there is no regulation to increase women directors in corporate boards. Supporting the critical mass theory, some studies proposed to include 3 or more women on corporate boards. A critical mass of three or more female directors has a positive impact on financial performance, according to (Brahma et al. (2021). Similarly, it is suggested that governments and market regulators consider the implementation of gender quotas for women on corporate boards, as has been observed in other European countries. 7.3. Limitations and avenues for future research Our research has several limitations. Further investigation is required to address this one’s caveats. Firstly, this study analysed data from the years 2015 to 2019. Following 2019, the COVID-19 pandemic substantially impacted the global economy, affecting both earnings management and corporate performance. Subsequent investigations might employ the same research model used in the study to compare the results before, during, and after the epidemic. Secondly, the current body of research emphasises the significance of additional gender characteristics, such as political affiliations, diversity within audit committees, professional experience, educational background, social connections, age, and specialised knowledge, in elucidating the influence of gender on corporate board positions. Excluding these aspects, this study suggests that future research should investigate these attributes to comprehensively understand the correlation between gender diversity, earnings management, and firm performance. Thirdly, the sample size for this study was restricted exclusively to energy firms in the South Asian region. Subsequent research endeavours could perform comparative analyses by examining energy companies from diverse places that possess distinct institutional frameworks. Fourthly, this study examined how earnings management mediates the connection between gender diversity and firm performance. Additional investigation is required to examine additional elements (such as moderators and mediators) that may impact this association, according to the inconsistent findings in existing studies. Fifthly, future research endeavours could incorporate alternative performance measures, such as Return on Equity (ROE), Return on Sales (ROS), Earnings Per Share (EPS), and Z-score, in addition to the utilisation of ROA and Tobin’s Q in this study. In addition, this study employed the modified Jones model to assess accrual earnings management. Subsequent research could explore alternative models for measuring both accrual earnings management and real earnings management. Finally, it is crucial to acknowledge that this study relies on secondary data and is empirical in its approach. Future researchers can do analysis using primary data, mixed study, or a systematic review (see, for example, (Jebarajakirthy etal., 2021)); meta-analysis (see, for instance, (Majumder et al., 2019) and (Majumder et al., 2017)); bibliometric analysis (see, for example, (Kent Baker et al., 2020)); and other review analysis to identify other dominating factors influencing on BGD-firm performance relationship. Notes 1. https://sdgs.un.org/goals/goal5 2. https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_869930/lang–en/index.htm 20 M. T. H. MAJUMDER ETAL. 3. https://www.weforum.org/reports/global-gender-gap-report-2023/?gclid=CjwKCAjw-7OlBhB8EiwAnoOEk3Qvb KChZBJTFjHuJ-fbkYyAPmhQQcj6qGJ5R3GcdNyxeBUGL32RgRoCvs4QAvD_BwE 4. https://www2.deloitte.com/content/dam/Deloitte/global/Documents/gx-women-in-the-boardroom-seventhedition.pdf 5. https://www2.deloitte.com/content/dam/Deloitte/global/Documents/gx-women-in-the-boardroom-seventhedition.pdf 6. For more details, we encourage readers to read the Zhao etal. (2010) paper to avoid using the Baron & Kenny (1986) and Sobel (1982) model for the mediation analysis. 7. World Bank Data, 2019 (available at https://data.worldbank.org/country) 8. https://www.iea.org/reports/scaling-up-private-finance-for-clean-energy-in-emerging-and-developing-economies/ executive-summary 9. https://thefinancialexpress.com.bd/views/analysis/taking-women-on-board-1617387504 10. https://www.secp.gov.pk/laws/regulations/ 11. World Bank Data, 2019 (available at https://data.worldbank.org/country) 12. https://stockexchange.mv (accessed on 05 October, 2021) 13. https://www.cse.lk/pages/gics-classification/gics-classification.component.html 14. https://rsebl.org.bt (accessed on 05 October, 2021) 15. Nifty 500 index companies are the top 500 companies in India based on full market capitalization. Authors’ contributions Conception and design: Md. Tofael Hossain Majumder and Shaker Al-Duais Analysis and interpretation of the data: Md. Tofael Hossain Majumder Drafting of the article: Md. Tofael Hossain Majumder Revising it critically for intellectual content: Md. Tofael Hossain Majumder; Mohamad Ali Abdul Hamid; Bany Ariffin Amin Noordin; and Shaker Al-Duais Final approval of the version to be published: Md. Tofael Hossain Majumder; Mohamad Ali Abdul Hamid; Bany Ariffin Amin Noordin; and Shaker Al-Duais All authors stated that agree to be accountable for all aspects of the work. Disclosure statement No potential conflict of interest was reported by the author(s). About the authors Md. Tofael Hossain Majumder is working as a Professor of Accounting at Comilla University, Bangladesh. His research area includes corporate governance, corporate social disclosures, earnings management, risk management, human resource management, and firm performance. Mohamad Ali Abdul Hamid is a Professor of Accounting at Putra Business School, University Putra Malaysia. His current research includes Corporate Governance, Earnings Management, Financial Reporting Quality, Working Capital Management, Disclosure Quality, Audit Quality, Ownership Structure, Intellectual Capital, and Accounting Education. Bany Ariffin Amin Noordin is an Associate Professor and Dean at the School of Business and Economics, University Putra Malaysia. Dr. Banny’s research interest lies in CSR, stock market, capital structure, goodwill, firm performance, mergers & acquisitions etc. Shaker AL-Duais is an Assistant Professor of Accounting and Auditing at Faculty of Administrative Science, Ibb University, Yemen. His research interests include earnings management, financial accounting and reporting, corporate governance, and auditing. Funding The authors receive no direct funding for this research. ORCID Md. Tofael Hossain Majumder http://orcid.org/0000-0002-4353-8308 Bany Ariffin Amin Noordin http://orcid.org/0000-0002-7127-467X Shaker Al-Duais http://orcid.org/0000-0001-9948-2684 COGENT BUSINESS & MANAGEMENT 21 Data availability statement The data collected for this research are from the annual reports of each sample firm, which are available on the firms’ websites. The data presented in this study are available on request from the corresponding author. References Abdullah, S. N. (2014). The causes of gender diversity in Malaysian large firms. Journal of Management & Governance, 18(4), 1137–1159. https://doi.org/10.1007/s10997-013-9279-0 Abdullah, S. N., Ismail, K. N. I. K., & Nachum, L. (2016). Does having women on boards create value? The impact of societal perceptions and corporate governance in emerging markets. Strategic Management Journal, 37(3), 466– 476. https://doi.org/10.1002/smj.2352 Ahmad, M., Raja Kamaruzaman, R. N. S., Hamdan, H., & Annuar, H. A. (2020). Women directors and firm performance: Malaysian evidence post policy announcement. Journal of Economic and Administrative Sciences, 36(2), 97–110. https://doi.org/10.1108/JEAS-04-2017-0022 Ahmadi, A., Nakaa, N., & Bouri, A. (2018). Chief Executive Officer attributes, board structures, gender diversity and firm performance among French CAC 40 listed firms. Research in International Business and Finance, 44, 218–226. https://doi.org/10.1016/j.ribaf.2017.07.083 Akter, A., Majumder, M. T. H., & Uddin, M. J. (2018). Do capital regulations and risk-taking behavior affect bank performance? Evidence from Bangladesh. Asian Economic and Financial Review, 8(8), 1042–1074. https://doi. org/10.18488/journal.aefr.2018.88.1042.1074 AlHares, A. M. (2017). A Cross-Country study of the effects of corporate governance mechanisms on Risk-Taking, credit rating and cost of Capital [Doctoral dissertation]. University of Huddersfield Repository. University of Huddersfield. AlHares, A. (2020). Corporate governance mechanisms and R&D intensity in OECD courtiers. Corporate Governance: The International Journal of Business in Society, 20(5), 863–885. https://doi.org/10.1108/CG-11-2019-0349 Almarayeh, T. (2023). Board gender diversity, board compensation and firm performance. Evidence from Jordan. Journal of Financial Reporting and Accounting, 21(3), 673–694. https://doi.org/10.1108/JFRA-05-2021-0138 Alodat, A. Y., Salleh, Z., Nobanee, H., & Hashim, H. A. (2023). Board gender diversity and firm performance: The mediating role of sustainability disclosure. Corporate Social Responsibility and Environmental Management, 30(4), 2053– 2065. https://doi.org/10.1002/csr.2473 Al-Okaily, J., & Naueihed, S. (2020). Audit committee effectiveness and family firms: impact on performance. Management Decision, 58(6), 1021–1034. https://doi.org/10.1108/MD-04-2018-0422 Alves, S. (2023). Gender diversity on corporate boards and earnings management: Evidence for European Union listed firms. Cogent Business & Management, 10(1), 2193138. https://doi.org/10.1080/23311975.2023.2193138 Amadi, C., Ode-Ichakpa, I., Guo, W., Thomas, R., & Dimopoulus, C. (2023). Gender diversity as a CSR tool and financial performance in China. Cogent Business & Management, 10(2), 2207695. https://doi.org/10.1080/23311975.2023.220 7695 Amin, A., Ali, R., Rehman, R. u., Naseem, M. A., & Ahmad, M. I. (2022). Female presence in corporate governance, firm performance, and the moderating role of family ownership. Economic Research-Ekonomska Istraživanja, 35(1), 929– 948. https://doi.org/10.1080/1331677X.2021.1952086 Arellano, M., & Bond, S. (1991). Some tests of specification for panel Carlo application to data: Evidence and an employment equations. The Review of Economic Studies, 58(2), 277–297. https://doi.org/10.2307/2297968 Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304-4076(94)01642-D Arora, A. (2021). Gender diversity in boardroom and its impact on firm performance. Journal of Management and Governance, 26(3), 735–755. https://doi.org/10.1007/s10997-021-09573-x Arora, A., & Bodhanwala, S. (2018). Relationship between corporate governance index and firm performance: Indian evidence. Global Business Review, 19(3), 675–689. https://doi.org/10.1177/0972150917713812 Arvanitis, S. E., Varouchas, E. G., & Agiomirgianakis, G. M. (2022). Does board gender diversity really improve firm performance? Evidence from Greek listed firms. Journal of Risk and Financial Management, 15(7), 306. https://doi. org/10.3390/jrfm15070306 Aryani, Y. A., Mahendrastiti, A. E., Setiawan, D., Arifin, T., & Gantyowati, E. (2024). Women director characteristics and earnings quality: Evidence from banking industry in Indonesia. Cogent Business & Management, 11(1), 2304371. https://doi.org/10.1080/23311975.2024.2304371 Asghar, A., Sajjad, S., Shahzad, A., & Matemilola, B. T. (2020). Role of discretionary earning management in corporate governance-value and corporate governance-risk relationships. Corporate Governance: The International Journal of Business in Society, 20(4), 561–581. https://doi.org/10.1108/CG-11-2019-0347 Ashraf, B. N. (2017). Political institutions and bank risk-taking behavior. Journal of Financial Stability, 29, 13–35. https:// doi.org/10.1016/j.jfs.2017.01.004 Assenga, M. P., Aly, D., & Hussainey, K. (2018). The impact of board characteristics on the financial performance of Tanzanian firms. Corporate Governance: The International Journal of Business in Society, 18(6), 1089–1106. https://doi. org/10.1108/CG-09-2016-0174 22 M. T. H. MAJUMDER ETAL. Baron, R. M., & Kenny, D. A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182. https://doi.org/10.1037/0022-3514.51.6.1173 Bart, C., & McQueen, G. (2013). Why women make better directors. International Journal of Business Governance and Ethics, 8(1), 93–99. https://doi.org/10.1504/IJBGE.2013.052743 Ben Fatma, H., & Chouaibi, J. (2023). Gender diversity, financial performance, and the moderating effect of CSR: empirical evidence from UK financial institutions. Corporate Governance: The International Journal of Business in Society, 23(7), 1506–1525. https://doi.org/10.1108/CG-11-2022-0445 Betti, G., Neri, L., Lonzi, M., & Lemmi, A. (2020). Objective environmental indicators and subjective well-being: Are they directly related? Sustainability, 12(6), 2277. https://doi.org/10.3390/su12062277 Blau, P. M. (1977). Inequality and heterogeneity: A primitive theory of social structure (Vol. 7). Free Press New York. Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143. https://doi.org/10.1016/S0304-4076(98)00009-8 Borralho, J. M., Vázquez, D. G., & Hernández-Linares, R. (2020). Earnings management in private family versus non-family firms. The moderating effect of family business generation. Spanish Journal of Finance and Accounting/ Revista Española de Financiación y Contabilidad, 49(2), 210–233. https://doi.org/10.1080/02102412.2019.1616480 Bouaziz, S. S., Fakhfakh, I. B. A., & Jarboui, A. (2020). Shareholder activism, earnings management and Market performance consequences: French case. International Journal of Law and Management, 62(5), 395–415. https://doi. org/10.1108/IJLMA-03-2018-0050 Boukattaya, S., Ftiti, Z., Ben Arfa, N., & Omri, A. (2022). Financial performance under board gender diversity: The mediating effect of corporate social practices. Corporate Social Responsibility and Environmental Management, 29(5), 1871–1883. https://doi.org/10.1002/csr.2333 Brahma, S., Nwafor, C., & Boateng, A. (2021). Board gender diversity and firm performance: The UK evidence. International Journal of Finance & Economics, 26(4), 5704–5719. https://doi.org/10.1002/ijfe.2089 Cabeza-García, L., Del Brío, E. B., & Rueda, C. (2021). The moderating effect of innovation on the gender and performance relationship in the outset of the gender revolution. Review of Managerial Science, 15(3), 755–778. https:// doi.org/10.1007/s11846-019-00367-y Chatterjee, C., & Nag, T. (2023). Do women on boards enhance firm performance? Evidence from top Indian companies. International Journal of Disclosure and Governance, 20(2), 155–167. https://doi.org/10.1057/s41310-022-00153-5 Chen, C., & Hassan, A. (2022). Management gender diversity, executives compensation and firm performance. International Journal of Accounting & Information Management, 30(1), 115–142. https://doi.org/10.1108/IJAIM-05-2021-0109 Chen, C.-W., Sutton, N. K., Yi, B., & Zheng, Q. (2023). The connection between gender diversity and firm performance: Evidence from Taiwan. International Review of Financial Analysis, 89, 102763. https://doi.org/10.1016/j.irfa.2023.102763 Chen, M.-Y., & Kao, C.-L. (2022). Women on boards of directors and firm performance: The mediation of employment downsizing. The International Journal of Human Resource Management, 33(13), 2597–2629. https://doi.org/10.1080/ 09585192.2020.1867617 Chen, X., Cheng, Q., & Wang, X. (2015). Does increased board independence reduce earnings management? Evidence from recent regulatory reforms. Review of Accounting Studies, 20(2), 899–933. https://doi.org/10.1007/s11142-015-9316-0 Chijoke-Mgbame, A. M., Boateng, A., & Mgbame, C. O. (2020). Board gender diversity, audit committee and financial performance: Evidence from Nigeria. Accounting Forum, 44(3), 262–286. https://doi.org/10.1080/01559982.2020.1766280 Ciftci, I., Tatoglu, E., Wood, G., Demirbag, M., & Zaim, S. (2019). Corporate governance and firm performance in emerging markets: Evidence from Turkey. International Business Review, 28(1), 90–103. https://doi.org/10.1016/j. ibusrev.2018.08.004 Coleman, M., & Wu, M. (2020). Corporate governance mechanisms and corporate performance of firms in Nigeria and Ghana. International Journal of Productivity and Performance Management, 70(8), 2319–2351. https://doi.org/10.1108/ IJPPM-01-2020-0020 Core, J. E., Guay, W. R., & Rusticus, T. O. (2006). Does weak governance cause weak stock returns? An examination of firm operating performance and investors’ expectations. The Journal of Finance, 61(2), 655–687. https://doi. org/10.1111/j.1540-6261.2006.00851.x Dakhlallh, M. M., Rashid, N., Abdullah, W. A. W., Qawqzeh, H. K., & Dakhlallh, A. M. (2020). Accrual-based earnings management, real earnings management and firm performance: Evidence from public shareholders listed firms on Jordanian’s stock market. Journal of Advanced Research in Dynamical and Control Systems, 12(1), 16–27. https://doi. org/10.5373/JARDCS/V12I1/20201004 D’Amato, A. (2017). Do women perform better in family firms? International Journal of Wine Business Research, 29(3), 299–315. https://doi.org/10.1108/IJWBR-12-2016-0039 Đặng, R., Houanti, L., Reddy, K., & Simioni, M. (2020). Does board gender diversity influence firm profitability? A control function approach. Economic Modelling, 90, 168–181. https://doi.org/10.1016/j.econmod.2020.05.009 Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. Accounting Review, 70(2), 193– 225. Deloitte. (2002). https://www2.deloitte.com/content/dam/Deloitte/global/Documents/gx-women-in-the-boardroom-seventhedition.pdf. Demircioglu, M. A. (2021). Sources of innovation, autonomy, and employee job satisfaction in public organizations. Public Performance & Management Review, 44(1), 155–186. https://doi.org/10.1080/15309576.2020.1820350 COGENT BUSINESS & MANAGEMENT 23 Detthamrong, U., Chancharat, N., & Vithessonthi, C. (2017). Corporate governance, capital structure and firm performance: Evidence from Thailand. Research in International Business and Finance, 42, 689–709. https://doi.org/10.1016/j. ribaf.2017.07.011 Ding, R., Duan, T., Hou, W., Liu, X., & Xu, Z. (2022). Do women drive corporate social responsibility? Evidence from gender diversity reforms around the world. International Review of Law and Economics, 72, 106097. https://doi. org/10.1016/j.irle.2022.106097 El Diri, M., Lambrinoudakis, C., & Alhadab, M. (2020). Corporate governance and earnings management in concentrated markets. Journal of Business Research, 108, 291–306. https://doi.org/10.1016/j.jbusres.2019.11.013 Elzahaby, M. A. (2021). How firms’ performance mediates the relationship between corporate governance quality and earnings quality? Journal of Accounting in Emerging Economies, 11(2), 278–311. https://doi.org/10.1108/ JAEE-09-2018-0100 Enomoto, M., Kimura, F., & Yamaguchi, T. (2015). Accrual-based and real earnings management: An international comparison for investor protection. Journal of Contemporary Accounting & Economics, 11(3), 183–198. https://doi. org/10.1016/j.jcae.2015.07.001 Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2), 301–325. https://doi.org/10.1086/467037 Farooq, M., & Ahmad, N. (2023). Nexus between board characteristics, firm performance and intellectual capital: An emerging market evidence. Corporate Governance: The International Journal of Business in Society, 23(6), 1269–1297. https://doi.org/10.1108/CG-08-2022-0355 Farooque, O. A., Van Zijl, T., Dunstan, K., & Karim, A. K. M. W. (2007). Corporate governance in Bangladesh: Link between ownership and financial performance. Corporate Governance: An International Review, 15(6), 1453–1468. https://doi.org/10.1111/j.1467-8683.2007.00657.x Fernando, G. D., Sarin, S., & Tripathy, A. (2020). This cloud has a silver lining : Gender diversity, managerial ability, and firm performance. Journal of Business Research, 117, 484–496. https://doi.org/10.1016/j.jbusres.2020.05.042 Feviana, D. L., & Supatmi, S. (2021). Good corporate governance affects company value with earnings management as intervening variables in BUMN. International Journal of Social Science and Business, 5(1), 16–25. https://doi. org/10.23887/ijssb.v5i1.31530 Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), 125–152. https://doi.org/10.2308/ajpt-50006 Frink, D. D., Robinson, R. K., Reithel, B., Arthur, M. M., Ammeter, A. P., Ferris, G. R., Kaplan, D. M., & Morrisette, H. S. (2003). Gender demography and organization performance: A two-study investigation with convergence. Group & Organization Management, 28(1), 127–147. https://doi.org/10.1177/1059601102250025 Ghafoor, S., Duffour, K. A., Khan, U. F., & Khan, M. K. (2022). Social wellbeing, board-gender diversity, and financial performance: Evidence from Chinese Fintech companies. Frontiers in Psychology, 13, 862897. https://doi.org/10.3389/ fpsyg.2022.862897 Green, C. P., & Homroy, S. (2018). Female directors, board committees and firm performance. European Economic Review, 102, 19–38. https://doi.org/10.1016/j.euroecorev.2017.12.003 Gull, A. A., Nekhili, M., Nagati, H., & Chtioui, T. (2018). Beyond gender diversity: How specific attributes of female directors affect earnings management. The British Accounting Review, 50(3), 255–274. https://doi.org/10.1016/j.bar.2017.09.001 Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2019). Multivariate data analysis. Cengage Learning. Hair, J. F., Hult, G. T. M., Ringle, C. M., Sarstedt, M., Danks, N. P., & Ray, S. (2021). Partial Least Squares Structural Equation Modeling (PLS-SEM) using R. Springer Nature. https://doi.org/10.1007/978-3-030-80519-7 Hazaea, S. A., Al-Matari, E. M., Farhan, N. H. S., & Zhu, J. (2023). The impact of board gender diversity on financial performance: a systematic review and agenda for future research. Corporate Governance: The International Journal of Business in Society, 23(7), 1716–1747. https://doi.org/10.1108/CG-07-2022-0302 Huse, M., & Solberg, A. G. (2005). Gender-related boardroom dynamics: How Scandinavian women make and can make contributions on corporate boards. Women in Management Review, 21(2), 113–130. https://doi. org/10.1108/09649420610650693 Islam, M. T., Rahman, M., & Saha, S. (2020). Corporate governance reform and overstatement of compliance: Illustrations from an emerging economy. Business Strategy & Development, 3(4), 648–656. https://doi.org/10.1002/bsd2.129 Islam, M. T., Rahman, M., & Saha, S. (2022). Reforms of corporate governance codes in Bangladesh: developments and future directions. Journal of Risk and Financial Management, 15(8), 347. https://doi.org/10.3390/jrfm15080347 Istianingsih, n. (2021). Earnings quality as a link between corporate governance implementation and firm performance. International Journal of Management Science and Engineering Management, 16(4), 290–301. https://doi.org/ 10.1080/17509653.2021.1974969 Jamil, A., Mohd Ghazali, N. A., & Puat Nelson, S. (2020). The influence of corporate governance structure on sustainability reporting in Malaysia. Social Responsibility Journal, 17(8), 1251–1278. https://doi.org/10.1108/SRJ-08-2020-0310 Jebarajakirthy, C., Maseeh, H. I., Morshed, Z., Shankar, A., Arli, D., & Pentecost, R. (2021). Mobile advertising: A systematic literature review and future research agenda. International Journal of Consumer Studies, 45(6), 1258–1291. https://doi.org/10.1111/ijcs.12728 Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X