Women in top executive positions, external audit quality and financial reporting quality: evidence from Vietnam

Abstract

Purpose This study aims to investigate the effect of the presence of women in top executive positions on financial reporting quality (FRQ) and the role of external audit in enhancing the role of women in top executive positions. Design/methodology/approach This study uses a sample of 644 Vietnamese-listed firms from 2010 to 2020 and applies fixed-effect and dynamic system generalized method of moments techniques for empirical models to test the related hypotheses. Findings First, this study found a U-shaped relationship between women on the board and FRQ as well as women on the audit committee and FRQ. Second, female CEOs are positively associated with FRQ in small firms but there is no evidence of this in large firms. Third, a female chief accountant can enhance FRQ. Finally, external audit quality can reduce the negative effect of women on the board and the audit committee on FRQ and increase the positive impact of female chief accountants on FRQ. Practical implications The results support all risk-averse, ethical sensitivity and glass ceiling hypotheses in different contexts. This study provides important implications for firms to enhance FRQ by nominating women in a majority of top executive positions and simultaneously using high-quality external audit services. Originality/value The impact of women in top executive positions on controlling FRQ in different contexts is an original contribution to gender in management literature.