This study explores how FinTech advancements, economic policy uncertainty (EPU), and social media sentiments affect bank stock returns in the United States. We analysed data from 338 listed banks between 2010 and 2022, using a two-step Generalised Method of Moments estimator to address potential biases. Our findings show that EPU has the most significant negative impact on bank stock returns, highlighting the importance of stable policies for maintaining investor confidence. While FinTech advancements generally boost bank performance, they can temporarily hurt profitability due to initial costs and market scepticism. Positive social media sentiments, especially from platforms like Twitter, significantly enhance investor confidence and bank stock returns. However, when combined with high EPU, the positive effects of FinTech and social media are diminished, showing the density of these interactions. Robustness checks, including feasible generalised least squares and control variables such as unemployment, political stability, and the Z-Score, confirm the consistency of our results. This study provides valuable insights for policymakers, financial institutions, and researchers, emphasising the need for strategies that integrate technological, social and policy factors to support financial stability and market performance.

Purpose This study aims to examine the association between audit partner busyness and audit quality. Moreover, this research investigates whether boardroom gender diversity moderates the relationship between audit partner busyness and audit quality in Australia. Design/methodology/approach The study sample consists of all public companies listed on the Australian Stock Exchange from 2005 to 2014. The data is obtained from SIRCA and the Morning Star databases. The study uses fixed effects and logistic regression techniques to test the relationship between audit partner busyness, boardroom gender diversity and audit quality. Findings The collected empirical evidence shows that audit partner busyness is negatively associated with audit quality. In contrast, boardroom gender diversity moderates the relationship between audit partner busyness and audit quality. More specifically, the results suggest that board gender diversity mitigates the negative impact of audit partners’ busyness on the audit quality. The results are robust to endogeneity and alternative definitions of audit partner busyness, boardroom gender diversity and audit quality. Practical implications The study’s findings will be of interest to policymakers, regulators and investors in the Australian market. The results show the importance of gender-diverse boards in companies’ audit functions, particularly in the presence of busy audit partners, and hence support the call for more women on corporate boards in Australia. Moreover, the results call for a cap or upper limit on the number of clients an audit partner can take on based on their capacity. Originality/value The authors contribute to the growing literature on board gender diversity, audit partner busyness and audit quality. Although a plethora of prior literature suggests a negative association between audit partner busyness and audit quality, the results suggest that women in the boardroom positively moderate the relationship between audit partner busyness and audit quality.

PurposeThe purpose of this study is to examine the influence of corporate governance (CG) mechanisms on earnings management (EM) within the Gulf Co-operation Council (GCC) countries. In addition, the impact of firm's political connections (PCs) on EM is investigated, as well as whether it moderates the relationship between CG and EM.Design/methodology/approachFixed-effects model is used on a sample of non-financial firms across the GCC countries to test the hypotheses. Moreover, a two-stage least squares method and a propensity score matching procedure are used to mitigate potential reverse causality and sample selection bias.FindingsThis study reveals that CG mechanisms such as board size and board independence are negatively associated with EM, while CEO duality is positively association with EM. In addition, this study shows that institutional ownership and blockholders do not influence EM. Furthermore, PCs are shown to play a moderating role in the relationship between CG and EM. The results of this study are robust to endogeneity testing and to alternative measures of CG.Research limitations/implicationsBecause of a lack of data, the authors do not consider additional CG attributes such as tenure, education and age of board members. Future research could explore the impact of these attributes when data becomes available.Practical implicationsThis study provides valuable insights for government officials, policymakers, standard-setters, regulators and corporations by presenting new evidence on the relationship among CG, PCs and EM. Moreover, this study underscores that, in the absence of a strong institutional infrastructure and investor protection, relying solely on strong CG and Islamic values and GCC culture may have a limited impact on effective monitoring of opportunistic managerial behaviors.Originality/valueThis study contributes to existing literature with a specific focus on the unique political, legal, institutional, social and cultural setting of the GCC region. Moreover, this study provides new insights that PCs serve as a governance mechanism in mitigating EM because relatively little attention has been given to the impact of PCs in improving accounting outcomes, especially in the context of the GCC region where Islamic ethical norms often shape business practices.

This study investigates the impact of corporate governance practices (namely board characteristics, ownership structure, and audit committee characteristics) on corporate tax avoidance. For this purpose, this study uses generalised least squares regression on a sample of 138 companies listed on the Pakistan Stock Exchange. Ten-year data from 2009 to 2018 are collected from published annual reports, comprising 1380 firm-year observations. The findings highlight that board independence, concentrated ownership, and audit committee gender diversity are negatively associated with tax avoidance. Conversely, managerial ownership and audit committee independence positively influence aggressive tax behaviour. Additional analysis reveals that these impacts are nonlinear and change with the different levels of tax avoidance. Enhanced governance stifles tax avoidance at lower levels; however, it encourages tax avoidance when firms are already aggressively avoiding taxes. This scenario represents a 'double down' behaviour depicted by the Pakistani corporate sector. This is one of the foremost studies to explore the impact of corporate governance on tax avoidance in Pakistan. It contributes to the literature by examining the impact of under-researched factors such as board meetings and audit committee characteristics and provides insights into the conflicting findings on board characteristics and ownership structure.

PurposeThis study aims to examine the influence of board gender diversity on audit quality demand, considering auditor choice and audit efforts within the Gulf Co-operation Council (GCC) countries. It further examines the role of political connections and the impact of gender equality policy initiatives on this relationship.Design/methodology/approachFixed-effects regression models are employed in a sample of 1,822 firm-year observations for financial firms across the GCC from 2011-2022 to test the hypotheses. Moreover, the two-stage-least-squares and the propensity score matching methods are used for sensitivity analysis.FindingsThe study shows a negative relationship between board gender diversity and the demand for audit quality, reflected auditor choice and audit efforts. However, the study shows a positive association between firm's political connections and audit quality demand, which is more pronounced in gender-diverse boards. Policy initiatives for gender equality show no significant effect on the relationship between board gender diversity and audit quality demand.Practical implicationsThe results inform governments, policy-makers, regulatory authorities and corporations by providing new evidence on the relationship between board gender diversity and the demand for audit quality, as well as the moderating role of political connections and policy initiatives in this relationship. To promote the meaningful participation of female directors in board decision-making, the findings indicate that gender stereotypes, both explicit and implicit, that can hinder female directors' influence in board decision-making need to be addressed. Second, the study underscores for governments, policy-makers regulatory authorities and corporations that the mere appointment of female directors does not necessarily ensure their engagement in board decision-making. The appointment of female directors should go beyond symbolism and translate into meaningful engagement and influence with the board.Originality/valueThis study contributes to the corporate governance literature by offering new insights on the link between board gender diversity and the demand for audit quality. Beyond confirming a negative relationship between board gender diversity and the demand for quality audit, this study provides new insights on the moderating role of a firm's political connections on this relationship. In addition, existing studies are primarily based on firms in Western countries and cannot be generalized due to differences in governance and legal structures. Given that the GCC countries have different cultures, economies, institutions, governance practices and norms compared to developed and emerging countries, our study offers a pertinent discussion on the relationship between board gender diversity and the demand for audit quality, as well as the moderating role of political connections in this relationship in the GCC countries.

Purpose This study aims to understand the dynamics of Australian boards by focusing on the influence of board gender diversity on firms' cash holdings, within the distinctive Australian "if not, why not" regulatory framework. Design/methodology/approach The study uses ordinary least squares (OLS), fixed effects, generalized method of moments (GMM) and quasi-experimental methods such as difference-in-differences and propensity score matching to analyze the data. Findings There is a significantly negative relationship between board gender diversity and corporate cash holdings. This relationship is more pronounced when two or more female directors are on the board, supporting the critical mass theory. The results also reveal that the observed pattern can be attributed to the heightened monitoring intensity of female independent directors. Our quasi-experimental methods and pre-post analysis reveal that the observed effects are genuinely attributable to the increase in board gender diversity following regulatory reforms in Australia. Practical implications The findings provide practical insights for companies and policymakers, emphasizing the tangible effects of gender diversity on a company's financial strategy and corporate cash holdings. This information is crucial for organizations aiming to make informed decisions regarding board compositions and governance structures. Originality/value This research offers fresh insights into an important relationship between gender diversity on boards and corporate financial strategies in the Australian context, enriching the global conversation on the significance of gender diversity in corporate leadership.

This study investigates the influence of boardroom gender diversity (BGD) on the adoption of Environmental, Social, and Governance (ESG) metrics in executive compensation, a concept emerging from the stakeholderism debate. Prior research has focused on the impact of BGD on traditional compensation metrics, but the role of BGD in ESG-linked compensation remains underexplored. Our research fills this gap by examining whether BGD contributes to the incorporation of ESG considerations in executive pay structures. Additionally, we analyze how board members' external affiliations might moderate this relationship, considering that these affiliations can provide diverse perspectives and insights into ESG issues. Using data from 14 countries, our findings reveal a positive and significant association between BGD and ESG metrics in executive compensation, suggesting that women directors significantly influence the integration of sustainability and ethical considerations in corporate strategic planning. Moreover, the impact of BGD on ESG-linked compensation is found to be more pronounced with higher levels of board members' affiliations. Our results are robust to alternate estimation techniques such as propensity score matching (PSM) and generalized methods of moments (GMM). Our study contributes to the existing literature on gender diversity, corporate governance, and sustainability, offering insights for policymakers and corporate boards on aligning corporate strategies with ESG goals.

PurposeIn this study, the authors investigate a pressing concern: how auditors react to their clients facing repercussions due to environmental violations. More specifically, this study aims to examine how environmental engagements, which carry potential risks and liabilities, influence auditors' decision-making and fee structure.Design/methodology/approachThis study uses unique, reliable and actual violation data from the United States Environmental Protection Agency (US-EPA) from 2000 to 2015, focusing on clients involved in environmental violations that led to legal prosecution and penalties and those who subsequently engaged in voluntary supplemental environmental projects (SEPs). The authors use the ordinary least squares method to test the authors' main research question and later use propensity score matching and alternate data source (ASSET4) to check the robustness of the authors' results.FindingsThe authors find that firms with environmental violations are more susceptible to auditor resignation. Moreover, the environmental violator firms that maintain their engagement with auditors pay significantly higher audit fees compared to non-environmental violator firms. Furthermore, these environmental violator firms also face extended audit report delays and take longer to appoint a new auditor.Originality/valueThis study provides an additional consequence of environmental violations, namely, increased chances of auditor resignation and higher audit fees, alongside the penalties imposed by the US-EPA. Moreover, the authors' findings position environmental violations and participation in SEPs as important factors in auditors' business risk assessment.

Purpose The purpose of this study is to examine the association between non-audit service fees provided by the auditor and auditor independence in stable and unstable economic conditions. Further, this study investigates whether client importance impairs auditor independence in two different Australian economic environments. Design/methodology/approach This study focuses on financially distressed firms listed on the Australian Stock Exchange from 2005 to 2014. The data is obtained from SIRCA and the Morning Star databases. The probit method is used as a baseline regression model, the two-stage least squares and the sensitivity of control variable tests are used to control for any endogeneity and self-selection bias concerns. Findings This study shows that in stable economic conditions, non-audit service fees provided by auditors impair auditor independence. This suggests that economic bonding between auditor and client serves as a threat to the auditor’s independence, perhaps because of the importance given to the larger clients. In contrast, the authors find no association between non-audit service fees and auditor independence in unstable (highly regulated) economic conditions largely because of higher litigation risk. The results of this study are robust to alternative model specifications and endogeneity concerns. Practical implications This study provides an important implication to regulators that macro-economic conditions influence the strength of incentives related to non-audit services for auditors. Furthermore, this study enhances the understanding of regulators (Australian Security Investment Commission) and the strategies adopted by Australian auditors in response to economic incentives and market-based incentives. Originality/value The authors contribute to the existing literature by providing evidence that there is a tradeoff between market-based incentives (i.e. lower litigation costs) and economic incentives (i.e. non-audit services fees) with economic uncertainty influencing the importance of these incentives to auditors.

We study whether boardroom gender diversity affects CEO pay. Specifically, we investigate the association between boardroom gender diversity and CEO pay deviation from the optimal level of CEO pay based on firm characteristics and market performance. Using a sample of 2,288 firm‐year observations for the period 2006–2014, we find that boardroom gender diversity is negatively associated with CEO pay deviation, suggesting that firms with gender‐diverse boards are cautious about the consequences of CEO pay deviation (under/overpayment), and thus likely to bridge the gap between CEO actual pay and expected pay. These findings provide important insights to the global discussion on executive compensation. Our findings are robust to alternative variable specifications, propensity score matching, difference‐in‐differences estimations, and generalised method of moments.

We examine the impact of religious beliefs on loan repayments in 770 microfinance institutions (MFIs) across 65 countries over the period 2006–2018. We find robust evidence of a negative relationship between religiosity and loan losses in MFIs. We also find that the relationship between religiosity and loan losses is stronger for MFIs in Protestant-dominated countries than in Catholic-dominated countries. Moreover, religiosity improves the operational self-sufficiency of MFIs through a reduction in loan losses. We find that religiosity does not improve the loan repayment behaviour of women borrowers, but it reduces the loan size per borrower. Overall, our evidence suggests that although religiosity reduces loan losses through religiosity-induced lender-risk aversion, it does not improve the loan repayment behaviour of borrowers. We also use several approaches to evaluate our results to the effects of endogeneity.

There is a recent upsurge in calls for more women on corporate boards around the world; however, a perception of women being risk-averse that is created by lottery and gambling studies has affected women's advancement in their career ladder. Our study investigates women's risk averseness when they are on corporate boards in the context of a firm's use of debt financing. Using a unique Australian setting, we find that women on the board have a positive association with the firm's use of debt financing. This suggests that firms with women on the board are not conservative in using debt financing. Our results are robust to the use of alternative measures of gender diversity and to a series of sensitivity checks including propensity score matching, difference-in-differences and two-stage least square techniques.

A number of previous studies use auditor propensity to issue a going concern opinion (GCO) as a proxy of audit quality when examining a sample of financially distressed firms. This study examines whether audit quality (measured by discretionary accruals) influences the probability of financially distressed firms receiving GCOs using a non-specific sample of 2937 firm-year observations from Australia over the period 2011-2015. The study first investigates the association between financially distressed firms and the issuance of GCOs. This association is then re-tested after separating the total sample into low and high audit quality subsamples. The results indicate that financially distressed firms are more likely to receive GCOs, confirming the application of ASA 570 Going Concern. However, financially distressed firms that receive GCOs from their auditors are limited to firms that have higher-quality audits.

Prior literature on firm value creation for stakeholders has oversimplified and narrowed the concept of value down to "economic returns." Although economic returns are fundamental to a firm's core stakeholders (i.e., shareholders), other legitimate stakeholders want "value" beyond economic returns. We define stakeholder value as the financial and nonfinancial returns a firm can offer to its legitimate stakeholders, and empirically investigate whether board gender diversity (BGD) improves our multidimensional measure of value. Using Thomson Reuters' ASSET4 data for U.K.-listed firms available from Eikon for the period 2007-2017, we report a significant positive relationship between BGD and stakeholder value creation. In particular, BGD increases social and environmental value creation in addition to economic returns. Furthermore, our results suggest that even though gender-diverse boards are associated with stakeholder value creation in family firms, this is only conspicuous for environmental value creation. The findings suggest that although female directors cater to the interests of broader stakeholder groups, family ownership causes them to mainly focus on environmental stakeholders. The study provides important implications for regulators, stakeholders, and academic scholars.

The risk and return implications of women on boards (WOB) are generally discussed in the arena of individuals’ risk preferences, and most previous studies conclude that women are risk-averse. If this argument is true, then firms with gender-diverse boards are likely to be less competitive in industry because they make less risky decisions. We explore another mechanism called “group dynamics”, through which WOB may moderate the firm risk and return relationship. Based on a relatively large dataset of UK listed firms for the period of 2007–2016, our results reveal a negative relationship between WOB and firm risk, but a positive impact of WOB and firm risk on profitability. Furthermore, we report a positive significant impact of WOB on observable dynamics of the board. Our findings support the group dynamics mechanism through which WOB may reduce risk but improve profitability, nullifying the stereotypical misconception of women as being risk-averse. This is further supported by a positive significant impact of WOB on firm leverage. Our results are robust to endogeneity issues, alternative gender diversity and risk measures. This study endorses recent regulatory changes, worldwide, that promote gender diversity on corporate boards. The study recognizes the group dynamics mechanism that may alter the risk-return relationship.

Previous studies suggest that CEOs may be incentivised to pursue actions aimed at restoring equity when pay deviates from the predicted CEO labour market compensation rate. This study investigates the effect of corporate governance (CG) quality on CEO pay deviation in an emerging economy characterised by weaker external corporate regulatory environment. Using a unique hand-collected data of 185 South African listed firms over a six-year period, We document that whereas CG quality impacts negatively on total CEO pay deviation, this is only conspicuous when the CEO is overpaid. CG quality has no effect on CEO compensation when the CEO is underpaid. We find that CEO underpayment reduces firm value in poorly-governed firms. In contrast, CEO overpayment has no effect on firm value irrespective of the level of CG quality. The findings imply that recent CEO pay level agitations have resulted in the design of CG mechanisms that reduces the tendency of CEO pay to adjust upwards. The results are robust to alternative econometric techniques and endogeneity concerns.

We show that the U.S. anti-discriminatory laws prohibiting discrimination in the workplace based on sexual orientation and gender identity (i.e. lesbian, gay, bisexual, and transgender (LGBT) identities) spur innovation, which ultimately leads to higher firm performance. We use the Human Rights Campaign's Corporate Equality Index (CEI) of 398 (1592 firm-year observations) U.S. firms between 2011 and 2014, and find a significantly positive relationship between CEI and firm innovation. We also find that an interacting effect of CEI and firm innovation leads to higher firm performance. We use our understanding of Rawls' Theory of Justice and stakeholder theory to show that firms with workplace diversity policies are likely to be more innovative and perform better than those without such policies. Our results are robust to endogeneity, reverse causality and simultaneity issues. Our results will trigger debate in similar markets around the globe on the economic benefits of LGBT workplace diversity policies for firms.

We examine the association between board gender diversity and corporate dividend payout. Our results suggest that although board gender diversity impacts positively on dividend payments, this is only conspicuous in widely held firms. However, when ownership concentration is high, board gender diversity reduces dividend payments. We demonstrate that women directors have the greatest impact on dividend payments when there are three or more women on the board. Our results indicate that the financial crisis period was associated with high dividend payments; however, women directors restrained the payment of dividends during the crisis period. These results suggest that board gender diversity may be an effective CG mechanism for alleviating principal-agent conflicts but not principal-principal agency conflicts. Our results are robust to endogeneity, as well as alternative proxies and estimation techniques.

Purpose The purpose of this paper is to analyse the relationship between female representation on corporate boards and intellectual capital (IC) efficiency – while prior studies focus on the relationship between gender diversity and firms’ financial performance. Design/methodology/approach Drawing on data from top 500 UK listed firms for 2007–2016 (3,279 firm-years), this study employs an adjusted-value-added intellectual coefficient as a measure of IC efficiency. Further, the two-step system-generalised method of moments has been applied to account for endogeneity issues. Findings The results reveal a significant positive relationship between female representation on boards and IC efficiency, including human capital, structural/innovation capital and financial capital efficiency. These results are robust to alternative proxies for the independent variable and difference-in-difference estimation. Practical implications The results posit that female representation on boards is associated with IC efficiency, which is vital for firms’ value creation and competitive advantage in the knowledge-economy era. The study also endorses current legislation to increase female representation on corporate boards. Originality/value This is among the limited studies to explore the role of female representation on boards in IC efficiency – while most prior studies relate IC efficiency to financial performance.

PurposeThis paper aims to investigate the determinants of women representation on Australian corporate boards under the ASX’s “if not, why not” corporate governance framework. It further aims to improve the study of Geiger and Marlin (2012) by using a theoretically sound two-limit Tobit model to examine the determinants.Design/methodology/approachThis study uses the two-limit Tobit model to examine the determinants of women representation on ASX 500 boards. This approach is used due to the censored nature of the dependent variable.FindingsThis study finds that the two-limit Tobit model is an appropriate methodology to accommodate the censored dependent variable. It further finds that firm size, women as chair of boards, corporate governance index, Global Reporting Initiative signatory, debt ratio, average board age, BIG4 auditors, chief executive officer tenure and shareholder concentration are major determinants of women on boards.Research limitations/implicationsThe use of only ASX 500 companies and the sample years (2011-2014) may limit the generalisation of the findings.Originality/valueThis is the first extensive longitudinal Australian study to examine the drivers of women representation on corporate boards. It is also the first of its kind to use the two-limit Tobit model to consider these determinants.