A new study led by an associate professor of management in the Culverhouse College of Business at the University of Alabama, finds that companies who have a woman as their chief financial officer are less likely to misreport data in financial statements than companies with men as their chief financial officer.
The study relied on a novel approach toward measuring financial misreporting that considered the data in a financial statement against the data expected under Benford’s Law of anomalous numbers, a tool widely used in forensic accounting and auditing. This methodology reliably flags likely financial misreporting and correlates well with several trusted accounting measures used to identify financial misstatements.
Vishal Gupta, the lead author of the study, notes that “over the years, we have learned much about the barriers preventing women from reaching senior management positions. But our knowledge is quite limited about the ways in which women’s corporate decisions differ from those of their male counterparts once they are in such coveted positions.”
Dr. Gupta added that “our research shows that firms with women CFOs have a lower likelihood of financial misreporting than firms with male CFOs, and these gender differences are stronger when there is low monitoring from key stakeholders.”
The full study, “CFO Gender and Financial Statement Irregularities,” was published in the Academy of Management Journal. It may be accessed here.