Earnings Management, Earnings Quality, Board Gender Diversity and Cost of Equity Capital: Evidence from an Emerging Market

This study seeks to analyse the direct association between earnings management (EM), earnings quality (EQ) and the cost of equity capital (CoEC). It also studies the mediating role of EQ and the moderating role of board gender diversity (BGD) in the context of the EM-CoEC nexus. Contradictions in the results of earlier investigations inspired the current study, with the findings filling a gap in the existing literature. This study presented a novel empirical model based on a mediation-moderation model, which sheds light on the mechanism of effect of numerous factors on the CoEC. The findings of this study reveal that the influence of EM practices on EQ is negative. Furthermore, the impact of EM practices on CoEC was positively significant, implying that the more EM practices there were, the higher the CoEC. At the same time, the findings show that EQ has a negative significant influence on CoEC. Additional findings confirm that EQ fully mediates the EM practices-CoEC nexus. Following that, in terms of BGD's moderating role, the findings indicate that BGD has a significant negative impact on CoEC, and the interaction impact (EM x BGD) is positive and significant.