The effect of corporate board diversity: real earnings management among Malaysian listed firms

Although past studies show a significant positive relationship between board diversity and firm performance, such research is still limited in the context of financial reporting quality of Malaysian firms. The research sample comprises of 3,255 firm-year observations listed on the Main Board of Bursa Malaysia from 2010 to 2014. A falsification test is also performed using another sub-sample to validate the results of the main analyses. The findings show that ethnicity and nationality diversities add value to the Board in terms of financial reporting decisions. The current study contributes to the existing literature by investigating the association of corporate diversity and the occurrences of real earnings management (REM)