The Impact of Gender Diversity in Boards of Directors on “Earnings Minimization” in Italian Private Companies

The study aims to verify whether and how gender diversity (here intended as the presence of females) in boards of directors affects Italian private (unlisted) companies’ propensity to engage in “earnings minimization”. This term refers to an earnings management practice consisting in the manipulation of earnings in order to bring them close to zero, generally stimulated by tax incentives. From a methodological standpoint, companies practicing earnings minimization are identified through the “earnings frequency distribution” approach suggested by Burgstahler and Dichev (1997) and research hypotheses are tested through logit regression analysis. The study shows that gender diversity in boards of directors does not contrast companies’ propensity to practice earnings minimization, neither directly nor indirectly (moderating the impact that bank indebtedness has on the propensity to practice it).