Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality

Abstract

This research investigates the relationship between the expertise of female audit committee (AC) chairs and financial reporting quality (FRQ). Also, it examines the moderating effect of the expertise of AC female chairs on the relationships between internal control (ICS), components of ICS, and FRQ This study analyses 302 firms listed on the Pakistan Stock Exchange from 2010 to 2016. Data on ICS, FRQ, and other corporate governance indications are collected manually from annual reports. This study concludes that the accounting expertise of AC female chairs enhances FRQ better than their male counterparts. Also, the accounting expertise of AC female chairs improve corporate governance mechanisms and ICSs (i.e., Control Environment, Control Activities, and information and communication). This research offers implications for shareholders and regulators. The accounting expertise of female AC chairs (WACCH) improve monitoring that enhances shareholder value and investor confidence. The regulator needs to be stricter regarding the requirements for AC chairs.

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