IFRS 9 and earnings management in Eurozone banking: The moderating effect of gender diversity

The present study examines the effect of adopting IFRS 9 on earnings management practices in European Central Bank-supervised banks, considering the possible moderating effect of gender diversity in this relationship. Using a system GMM methodology, findings suggest IFRS 9 promotes transparency and contributes to a decrease in earnings management, as the new impairment model influences directors' discretion. We also find that gender diversity moderates the negative impact of IFRS 9 on earnings management. However, when the board representation of women is substantial, the adoption of IFRS 9 results in an undesirable turn, as women are more conservative and risk-averse, which leads to measures of very early prevention of future losses.