Journal of Business Ethics

, Volume 127, Issue 2, pp 351–370 | Cite as

CEO Gender, Ethical Leadership, and Accounting Conservatism

  • Simon S. M. HoEmail author
  • Annie Yuansha Li
  • Kinsun Tam
  • Feida Zhang


Since male CEOs dominate corporate leadership, the literature on top management decision making suffers from an implicit masculine bias. Although research indicates that males and females are biologically and psychologically different, the leadership characteristics of female CEOs are largely unexplored. Two of these characteristics, risk aversion and ethical sensitivity, are tied to key accounting issues, such as conservatism in financial reporting and steadfast opposition to fraud. In this study, we examine the relationship between CEO gender and accounting conservatism, and find a positive association between the two. Consistent with conventional wisdom, this association appears to be stronger in firms with high rather than low litigation and takeover risks. This study contributes to the ethics literature by highlighting the benefits of gender diversity in upholding the integrity of financial reporting.


Accounting conservatism CEO gender Ethical leadership 



The authors wish to thank the editor, two anonymous reviewers and session participants at 2013 American Accounting Association Annual Meeting for helpful suggestions. We also gratefully acknowledge the recognition from the Gender Issues and Worklife Balance Section of American Accounting Association for the Best Paper Award. Zhang would like to express appreciation for the financial support from the National Natural Science Foundation of China (approval number: 71002058, 71202090, 71202091). All errors are ours.


  1. Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, 94(2), 291–309.CrossRefGoogle Scholar
  2. Ahmed, A. S., Billings, B. K., Morton, R. M., & Stanford-Harris, M. (2002). The role of accounting conservatism in mitigating bondholder–shareholder conflicts over dividend policy and in reducing debt costs. The Accounting Review, 77(4), 867–890.CrossRefGoogle Scholar
  3. American Psychiatric Association. (1994). The diagnostic and statistical manual of mental disorders (4th ed.). Washington, DC: American Psychiatric Association.Google Scholar
  4. Arfken, D. E., Bellar, S. L., & Helms, M. M. (2004). The ultimate glass ceiling revisited: The presence of women on corporate boards. Journal of Business Ethics, 50(2), 177–186.CrossRefGoogle Scholar
  5. Ball, R., Bushman, R. M., & Vasvari, F. P. (2008). The debt-contracting value of accounting information and loan syndicate structure. Journal of Accounting Research, 46(2), 247–287.CrossRefGoogle Scholar
  6. Ball, R., Kothari, S., & Robin, A. (2000). The effect of international institutional factors on properties of accounting earnings. Journal of Accounting and Economics, 29(1), 1–51.CrossRefGoogle Scholar
  7. Ball, R., & Shivakumar, L. (2005). Earnings quality in UK private firms: Comparative loss recognition timeliness. Journal of Accounting and Economics, 39(1), 83–128.CrossRefGoogle Scholar
  8. Ball, R., & Shivakumar, L. (2006). The role of accurals in asymmetrically timely gain and loss recognition. Journal of Accounting Research, 44(2), 207–242.Google Scholar
  9. Barber, B. M., & Odean, T. (2001). Boys will be boys: Gender, overconfidence, and common stock investment. The Quarterly Journal of Economics, 116(1), 261–292.CrossRefGoogle Scholar
  10. Barsky, R. B., Kimball, M. S., Juster, F. T., & Shapiro, M. D. (1997). Preference parameters and behavioral heterogeneity: An experimental approach in the health and retirement survey. Quarterly Journal of Economics, 112(2), 537–579.Google Scholar
  11. Basu, S. (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1), 3–37.CrossRefGoogle Scholar
  12. Beaver, W. H., & Ryan, S. G. (2005). Conditional and unconditional conservatism: Concepts and modeling. Review of Accounting Studies, 10(2), 269–309.CrossRefGoogle Scholar
  13. Bebchuk, L., Cohen, A. & Ferrell, A. (2009). What matters in corporate governance? Review of Financial Studies, 22(2), 783–827.Google Scholar
  14. Bentley, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30, 780–817. doi: 10.1111/j.1911-3846.2012.01174.x.CrossRefGoogle Scholar
  15. Bergstresser, D., & Philippon, T. (2006). CEO incentives and earnings management. Journal of Financial Economics, 80(3), 511–529.CrossRefGoogle Scholar
  16. Bernardi, R. A., & Arnold, D. F. (1997). An examination of moral development within public accounting by gender, staff level, and firm. Contemporary Accounting Research, 14(4), 653–668.CrossRefGoogle Scholar
  17. Bhatti, J. (2012). Europe moves toward quotas for female CEOs. USA Today.
  18. Bradshaw, P., Murray, V., & Wolpin, J. (1996). Women on boards of nonprofits: What difference do they make? Nonprofit Management and Leadership, 6(3), 241–254.CrossRefGoogle Scholar
  19. Brown, M. E., & Mitchell, M. S. (2010). Ethical and unethical leadership: Exploring new avenues for future research. Business Ethics Quarterly, 20, 583–616.CrossRefGoogle Scholar
  20. Brown, M. E., Trevino, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97(2), 117–134.CrossRefGoogle Scholar
  21. Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2011). Capital allocation and timely accounting recognition of economic losses. Journal of Business Finance & Accounting, 38(1–2), 1–33.CrossRefGoogle Scholar
  22. Byrnes, J. P., Miller, D. C., & Schafer, W. D. (1999). Gender differences in risk taking: A meta-analysis. Psychological Bulletin, 125(3), 367.CrossRefGoogle Scholar
  23. Campbell, K., & Minguez Vera, A. (2010). Female board appointments and firm valuation: Short and long-term effects. Journal of Management and Governance, 14(1), 37–59.CrossRefGoogle Scholar
  24. Campbell, K., & Minguez-Vera, A. (2008). Gender diversity in the boardroom and firm financial performance. Journal of Business Ethics, 83(3), 435–451.CrossRefGoogle Scholar
  25. Chen, H., Chen, J. Z., Lobo, G. J., & Wang, Y. (2010). Association between borrower and lender state ownership and accounting conservatism. Journal of Accounting Research, 48(5), 973–1014.CrossRefGoogle Scholar
  26. Cheng, Q., & Warfield, T. D. (2005). Equity incentives and earnings management. The Accounting Review, 80(2), 441–476.CrossRefGoogle Scholar
  27. Chung, H., & Wynn, J. P. (2008). Managerial legal liability coverage and earnings conservatism. Journal of Accounting and Economics, 46(1), 135–153.CrossRefGoogle Scholar
  28. Costa, P., Terracciano, A., & McCrae, R. R. (2001). Gender differences in personality traits across cultures: Robust and surprising findings. Journal of Personality and Social Psychology, 81(2), 322.CrossRefGoogle Scholar
  29. Creswell, J. (2006). How suite it isn’t: A dearth of female bosses. New York Times.
  30. Cumming, D. J., Leung, T. K., & Rui, O. M. (2012). Gender diversity and securities fraud. Available at SSRN: or Accessed 1 Aug 2012.
  31. Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review, 77, 35–59.CrossRefGoogle Scholar
  32. Dizik, A. (2011). Forget mentors—Sponsors can help you soar at work. Accessed 13 Sept 2011.
  33. Eckel, C. C., & Grossman, P. J. (2008). Forecasting risk attitudes: An experimental study using actual and forecast gamble choices. Journal of Economic Behavior & Organization, 68(1), 1–17.CrossRefGoogle Scholar
  34. European Commission. (2012a). Women in economic decision-making in the EU: Progress report. 30 Dec 2013.
  35. European Commission. (2012b). Women on boards: Commission proposes 40% objective.
  36. Evershed LLP. (2011). The Eversheds board report: Measuring the impact of board composition on company performance. Accessed 7 Aug 2011.
  37. Faccio, M., Marchica, M. T., & Roberto, M. (2012). CEO gender, corporate risk-taking, and the efficiency of capital allocation. Available at SSRN: or Accessed 21 Nov 2012.
  38. Feingold, A. (1994). Gender differences in personality: A meta-analysis. Psychological Bulletin, 116(3), 429.CrossRefGoogle Scholar
  39. Financial Accounting Standards Advisory Council. (2005). Joint conceptual framework project: Attachment F. Accessed June 2005.
  40. Fine, M. (2009). Women leaders’ discursive constructions of leadership. Women’s Studies in Communication, 32(2), 180–202.CrossRefGoogle Scholar
  41. Francis, W., Hasan, I., Park, J. C., & Qiang, W. (2009). Gender differences in financial reporting decision making: Evidence from accounting conservatism. Contemporary Accounting Research. Available at SSRN: or Accessed 9 Sept 2009.
  42. Francis, W., Hasan, I., & Qiang, W. (2013). The impact of CFO gender on bank loan contracting. Journal of Accounting, Auditing & Finance, 28(1), 53–78.CrossRefGoogle Scholar
  43. Francis, J. R., & Martin, X. (2010). Acquisition profitability and timely loss recognition. Journal of Accounting and Economics, 49(1), 161–178.CrossRefGoogle Scholar
  44. Francis, J., Philbrick, D., & Schipper, K. (1994). Shareholder litigation and corporate disclosures. Journal of Accounting Research, 32(2), 137–164.CrossRefGoogle Scholar
  45. Francoeur, C., Labelle, R., & Sinclair-Desgagne, B. (2008). Gender diversity in corporate governance and top management. Journal of Business Ethics, 81(1), 83–95.CrossRefGoogle Scholar
  46. Galbraith, S., & Stephenson, H. B. (1993). Decision rules used by male and female business students in making ethical value judgments: Another look. Journal of Business Ethics, 12(3), 227–233.CrossRefGoogle Scholar
  47. Givoly, D., & Hayn, C. (2000). The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative? Journal of Accounting and Economics, 29(3), 287–320.CrossRefGoogle Scholar
  48. Goh, B. W., & Li, D. (2011). Internal controls and conditional conservatism. The Accounting Review, 86, 975–1005.CrossRefGoogle Scholar
  49. Gompers, P., Ishii, J., & Metrick, A. (2003). Corporate governance and equity prices. The Quarterly Journal of Economics, 118(1), 107–156.CrossRefGoogle Scholar
  50. Gong, G., Ke, B., & Yu, Y. (2013). Home country investor protection, ownership structure and cross-listed firms’ compliance with SOX-mandated internal control deficiency disclosures. Contemporary Accounting Research,. doi: 10.1111/1911-3846.12000.Google Scholar
  51. Gul, F. A., Srinidhi, B., & Ng, A. C. (2011). Does board gender diversity improve the informativeness of stock prices? Journal of Accounting and Economics, 51(3), 314–338.CrossRefGoogle Scholar
  52. Hall, J. A. (1990). Nonverbal sex differences: Accuracy of communication and expressive style. Baltimore: Johns Hopkins University Press.Google Scholar
  53. Hirshleifer, D. (2002). Investor psychology and asset pricing. The Journal of Finance, 56(4), 1533–1597.CrossRefGoogle Scholar
  54. Holthausen, R. W., & Watts, R. L. (2001). The relevance of the value-relevance literature for financial accounting standard setting. Journal of Accounting and Economics, 31(1), 3–75.CrossRefGoogle Scholar
  55. Hong Kong Economic Journal. (2012, October 7). Institute of Chartered Company Secretaries: Board composition should not have restrictions.Google Scholar
  56. Hu, J., Li, A., & Zhang, F. (2013). Does accounting conservatism improve the corporate information environment? Working paper.Google Scholar
  57. Huang, J., & Kisgen, D. J. (2013). Gender and corporate finance: Are male executives overconfident relative to female executives. Journal of Financial Economics, 108(2013), 822–839.CrossRefGoogle Scholar
  58. Hunter, S. (2012). (Un)ethical leadership and identity: What did we learn and where do we go from here? Journal of Business Ethics, 107, 79–87.CrossRefGoogle Scholar
  59. Ibrahim, N., & Angelidis, J. (2009). The relative importance of ethics as a selection criterion for entry-level public accountants: Does gender make a difference? Journal of Business Ethics, 85, 49–58.CrossRefGoogle Scholar
  60. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.CrossRefGoogle Scholar
  61. Jianakoplos, N. A., & Bernasek, A. (2007). Are women more risk averse? Economic Inquiry, 36(4), 620–630.CrossRefGoogle Scholar
  62. Jiang, J. X., Petroni, K. R., & Wang, I. Y. (2010). CFOs and CEOs: Who have the most influence on earnings management? Journal of Financial Economics, 96(3), 513–526.CrossRefGoogle Scholar
  63. Jones, J. J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29, 193–228.CrossRefGoogle Scholar
  64. Khan, M., & Watts, R. L. (2009). Estimation and empirical properties of a firm-year measure of accounting conservatism. Journal of Accounting and Economics, 48(2), 132–150.CrossRefGoogle Scholar
  65. Kim, B. H., & Pevzner, M. (2010). Conditional accounting conservatism and future negative surprises: An empirical investigation. Journal of Accounting and Public Policy, 29(4), 311–329.CrossRefGoogle Scholar
  66. Kotiranta, A., Kovalainen, A., & Rouvinen, P. (2007). Female leadership and firm profitability. EVA Analysis, 3, 2007.Google Scholar
  67. Krishnan, G. V., & Parsons, L. M. (2008). Getting to the bottom line: An exploration of gender and earnings quality. Journal of Business Ethics, 78(1–2), 65–76.CrossRefGoogle Scholar
  68. Lafond, R., & Roychowdhury, S. (2008). Managerial ownership and accounting conservatism. Journal of Accounting Research, 46(1), 101–135.CrossRefGoogle Scholar
  69. LaFond, R., & Watts, R. L. (2008). The information role of conservatism. The Accounting Review, 83(2), 447–478.CrossRefGoogle Scholar
  70. Levi, M., Li, K., & Zhang, F. (2008). Mergers and acquisitions: The role of gender. Available at SSRN 1123735.Google Scholar
  71. Levin, I. P., Snyder, M. A., & Chapman, D. P. (1988). The interaction of experiential and situational factors and gender in a simulated risky decision-making task. The Journal of Psychology, 122(2), 173–181.CrossRefGoogle Scholar
  72. Levy, H., Elron, E., & Cohen, A. (1999). Gender differences in risk taking and investment behavior: An experimental analysis. Unpublished manuscript, The Hebrew University.Google Scholar
  73. Li, J. (2013). Accounting conservatism and debt contracts: Efficient liquidation and covenant renegotiation. Contemporary Accounting Research, 30(3), 1082–1098.Google Scholar
  74. Li, X. (2010). Accounting conservatism and cost of capital: International analysis. Available at SSRN: or Accessed 6 Dec 2010.
  75. Lückerath-Rovers, M. (2010). Women on boards and firm performance. Journal of Management and Governance, 17(2), 491–509.CrossRefGoogle Scholar
  76. Lund, D. B. (2008). Gender differences in ethics judgment of marketing professionals in the United States. Journal of Business Ethics, 77(4), 501–515.CrossRefGoogle Scholar
  77. Lundeberg, M. A., Fox, P. W., & Punćcohaŕ, J. (1994). Highly confident but wrong: Gender differences and similarities in confidence judgments. Journal of Educational Psychology, 86(1), 114.CrossRefGoogle Scholar
  78. Maccoby, E. E., & Jacklin, C. N. (1974). The psychology of sex differences (Vol. 1). Stanford, CA: Stanford University Press.Google Scholar
  79. Martin, A., Nishikawa, T., & Williams, M. (2009). CEO gender: Effects on valuation and risk. Quarterly Journal of Finance and Accounting, 48(3), 23–40.Google Scholar
  80. Mateos de Cabo, R., Gimeno, R., & Nieto, M. J. (2012). Gender diversity on European banks’ boards of directors. Journal of Business Ethics, 109(2), 145–162.CrossRefGoogle Scholar
  81. Michalos, A. (1982). Editorial: Purpose and policy. Journal of Business Ethics, 1(3), 255.CrossRefGoogle Scholar
  82. Michalos, A. (2004). Einstein, ethics and science. Journal of Academic Ethics, 2(4), 339–354.CrossRefGoogle Scholar
  83. Michalos, A. (2008). Ancient observations on business ethics: Middle East meets West. Journal of Business Ethics, 79(1/2), 9–19.CrossRefGoogle Scholar
  84. Miethe, T. D., & Rothschild, J. (1994). Whistleblowing and the control of organizational misconduct. Sociological Inquiry, 643(3), 322–347.CrossRefGoogle Scholar
  85. Moerman, R. (2008). The role of information asymmetry and financial reporting quality in debt trading: Evidence from the secondary loan market: Journal of Accounting and Economics, 46(2-3), 240–260.Google Scholar
  86. Neubert, M. J., Carlson, D. S., Kacmar, K. M., Roberts, J. A., & Chonko, L. B. (2009). The virtuous influence of ethical leadership behavior: Evidence from the field. Journal of Business Ethics, 90(2), 157–170.CrossRefGoogle Scholar
  87. Niederle, M., & Vesterlund, L. (2007). Do women shy away from competition? Do men compete too much? The Quarterly Journal of Economics, 122(3), 1067–1102.CrossRefGoogle Scholar
  88. O’Laughlin, E., & Brubaker, B. (1998). Use of landmarks in cognitive mapping: Gender differences in self report versus performance. Personality and Individual Differences, 24(5), 595–601.CrossRefGoogle Scholar
  89. Paine, L. S. (2003). Value shift: Why companies must merge social and financial imperatives to achieve superior performance. New York: McGraw-Hill.Google Scholar
  90. Pajares, F., & Miller, M. (1994). Role of self-efficacy and self-concept beliefs in mathematical problem solving: A path analysis. Journal of Educational Psychology, 86(2), 193–203.CrossRefGoogle Scholar
  91. Perez-Quiros, G., & Timmermann, A. (2000). Firm size and cyclical variations in stock returns. The Journal of Finance, 55(3), 1229–1262.CrossRefGoogle Scholar
  92. Poff, D. (2010). Ethical leadership and global citizenship: Considerations for a just and sustainable future. Journal of Business Ethics, 93(Supplement 1), 9–14.CrossRefGoogle Scholar
  93. Powell, M., & Ansic, D. (1997). Gender differences in risk behaviour in financial decision-making: An experimental analysis. Journal of Economic Psychology, 18(6), 605–628.CrossRefGoogle Scholar
  94. Prince, M. (1993). Women, men and money styles. Journal of Economic Psychology, 14(1), 175–182.CrossRefGoogle Scholar
  95. Prottas, D. (2013). Relationships among employee perception of their manager’s behavioral integrity, moral distress, and employee attitudes and well-being. Journal of Business Ethics, 113, 51–60.CrossRefGoogle Scholar
  96. Ramalingegowda, S., & Yu, Y. (2012). Institutional ownership and conservatism. Journal of Accounting and Economics, 53(1–2), 98–114.CrossRefGoogle Scholar
  97. Rodríguez-Domínguez, L., García-Sánchez, I. M., & Gallego-Álvarez, I. (2012). Explanatory factors of the relationship between gender diversity and corporate performance. European Journal of Law and Economics, 33(3), 603–620.CrossRefGoogle Scholar
  98. Rothschild, J., & Miethe, T. D. (1999). Whistle-blower disclosures and management retaliation: The battle to control information about organizational corruption. Work & Occupations, 26(1), 107–128.CrossRefGoogle Scholar
  99. Schminke, M., Ambrose, A., & Neubaum, D. (2005). The effect of leader moral development on ethical climate and employee attitudes. Organizational Behavior and Human Decision Processes, 97, 135–151.CrossRefGoogle Scholar
  100. Schrand, C. M., & Zechman, S. L. C. (2011). Executive overconfidence and the slippery slope to financial misreporting. Journal of Accounting and Economics, 53(1–2), 311–329.Google Scholar
  101. Schubert, R., Brown, M., Gysler, M., & Brachinger, H. W. (1999). Financial decision-making: Are women really more risk-averse? The American Economic Review, 89(2), 381–385.CrossRefGoogle Scholar
  102. Simga-Mugan, C., Daly, B. A., Onkal, D., & Kavut, L. (2005). The influence of nationality and gender on ethical sensitivity: An application of the issue-contingent model. Journal of Business Ethics, 57(2), 139–159.CrossRefGoogle Scholar
  103. Stock, J., & Yogo, M. (2005). Testing for weak instruments in IV regression. In D. Andrews & J. Stock (Eds.), Identification and inference for econometric models: A festschrift in honor of Thomas Rothenberg (pp. 80–108). Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
  104. Sugarman, D. and Straus, M. (1988). Indicators of gender equality for American states and regions. Social Indicators Research, 20(3), 229–270.Google Scholar
  105. Tate, G., & Yang, L. (2012). Female leadership and gender equity: Evidence from plant closure. Available at SSRN 1905100.Google Scholar
  106. Trevino, L. K., Hartman, L. P., & Brown, M. (2000). Moral person and moral manager: How executives develop a reputation for ethical leadership. California Management Review, 42(4), 128–142.CrossRefGoogle Scholar
  107. Valentine, S. R., & Rittenburg, T. L. (2004). Spanish and American business professionals’ ethical evaluations in global situations. Journal of Business Ethics, 51(1), 1–14.CrossRefGoogle Scholar
  108. Venkataraman, R., Weber, J., & Willenborg, M. (2008). Litigation risk, audit quality, and audit fees: Evidence from initial public offerings. The Accounting Review, 83(5), 1315–1345.CrossRefGoogle Scholar
  109. Vermeir, I., & Van Kenhove, P. (2008). Gender differences in double standards. Journal of Business Ethics, 81(2), 281–295.CrossRefGoogle Scholar
  110. Wagner, J. (2007). What a difference a Y makes: Female and male nascent entrepreneurs in Germany. Small Business Economics, 28(1), 1–21.CrossRefGoogle Scholar
  111. Watts, R. L. (2003). Conservatism in accounting part I: Explanations and implications. Accounting Horizons, 17(3), 207–221.CrossRefGoogle Scholar
  112. Watts, R., & Zimmerman, J. (1986). Positive accounting theory. Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
  113. Weeks, W. A., Moore, C. W., McKinney, J. A., & Longenecker, J. G. (1999). The effects of gender and career stage on ethical judgment. Journal of Business Ethics, 20(4), 301–313.CrossRefGoogle Scholar
  114. Zhang, J. (2008). The contracting benefits of accounting conservatism to lenders and borrowers. Journal of Accounting and Economics, 45(1), 27–54.CrossRefGoogle Scholar
  115. Zhu, W., May, D. R., & Avolio, B. J. (2004). The impact of ethical leadership behavior on employee outcomes: The roles of psychological empowerment and authenticity. Journal of Leadership and Organizational Studies, 11(1), 16–26.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Simon S. M. Ho
    • 1
    Email author
  • Annie Yuansha Li
    • 2
  • Kinsun Tam
    • 3
  • Feida Zhang
    • 4
  1. 1.University of Macau and Hang Seng Management CollegeMacao/Hong KongPeople’s Republic of China
  2. 2.University of Massachusetts LowellLowellUSA
  3. 3.State University of New York at AlbanyAlbanyUSA
  4. 4.School of Management and GovernanceMurdoch UniversityPerthAustralia

Personalised recommendations