The impact of board diversity on financial reporting quality in the GCC listed firms: the role of family and royal directors

Abstract

The present study examines the impact of board diversity on financial reporting quality with special consideration of the extent to which family and royal directors influence financial reporting quality (FRQ). The study utilises a sample of 181 listed GCC firms over the period from 2010 to 2016. Board personal attributes, including board expertise, age, gender, and nationality are investigated along with some other board issues such as; board size, meetings, and independence. Panel data analysis with fixed and random effect models are conducted to estimate the results. The results reveal that companies with large board size and greater age have less FRQ. Further, the results report that institutional founders, higher board independence, and expertise associate with greater levels of FRQ. The results also find that board meetings and family founders negatively influence FRQ. However, female directors, foreign directors, and royal board members setting in the board did not contribute to the levels of FRQ in the sampled companies. Finally, the results indicate that companies with a CEO royal member have higher levels of FRQ however, companies with chair board royals have less levels of FRQ. This research has valuable implications for investors, board of directors, analysts, academicians, and policymakers.