Audit Committee Characteristics, Gender Diversity and Earnings Management: Evidence from Listed Companies in Sri Lanka

Abstract

The study aims to explore the impact of audit committee characteristics and gender diversity on the earnings management of listed companies in Sri Lanka. The sample comprises 107 companies listed on the Colombo Stock Exchange (CSE) for the five years from 2017 to 2021. The audit committee size, independence, financial expertise, and the number of audit committee meetings proxy for audit committee characteristics while gender diversity is measured by the number of female directors on the board. This study used discretionary accruals as a signal of the presence of earnings management. The results reveal that audit committee size and gender diversity have a negative effect on the earnings management practices of listed companies. A low level of audit committee independence has a major effect as a device in mitigating earnings management.