Corporate governance and earnings management: The influence of female directors

This study investigates the effect of corporate governance on earnings management in Indonesian consumer non-cyclicals sector firms, and examines whether female board representation moderates this relationship. Grounded in agency theory, the research employs a quantitative panel data approach using 440 firm-year observations from 2019 to 2023. Earnings management is measured using the Modified Jones Model, while corporate governance is proxied through a composite factor derived from board size, independence, meeting frequency, and managerial ownership via factor analysis. The study applies moderated regression analysis to test the hypotheses. The findings show that strong corporate governance significantly reduces earnings management, supporting prior research in both developed and emerging markets. However, the presence of female directors does not significantly moderate this relationship. These results suggest that while board diversity is symbolically important, its practical impact on governance outcomes in emerging markets may be limited by institutional and cultural factors. The contribution of this research is to provide Indonesia-specific evidence on corporate governance. In addition, it also underscores the urgency of inclusive governance reform where it will impact the empowerment of female directors in a tangible way, rather than just representation.