Impact of Presence of Women in the Board on the Weakness of Internal Control

Document Type : Original Article


1 Associate Professor, Faculty of Management & Economics, Tarbiat Modares University, Tehran, Iran. (Corresponding author)

2 MSc Accounting, Tarbiat Modares University, Tehran, Iran.


The board of directors is the head of the supervisor and controller in the organization's system. Since the emergence of widespread changes in the business environment has led organizations to take advantage of diverse specializations and skills, changing the composition of the board and the diversity of vision and perceptual skills in their composition has doubled.
One of the indicators of diversity in the composition of the board of directors is the ratio of the presence of women in the composition of the board of directors. In this paper, the relationship between the presence of women in the board of directors and the weakness of internal control is examined. The required information from the financial statements and the report of the board of directors of 64 companies listed in Tehran Stock Exchange during the period 2012 to 2015 has been collected. To test the research hypothesis, logistic regression has been used Eviews software. The results of the research show that the presence of women in the board has a negative effect on the weakness of internal control. With the increasing presence of women in the board of directors, the company's internal control system is less vulnerable.


1)       Abbot,L. J.,Parker,S., & Preslry. (2010). Female board presence and the likelihood of financial restatement. Accounting Horizons, 26(4), 607-629
2)       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
3)       Ashbaugh-Skaife, H., Collins, D. W., & Kinney, W. R., Jr. (2007). The discovery and reporting of internal control deficiencies prior to SOX-mandated audits. Journal of Accounting and Economics, 44(1–2), 166–192
4)       Balsam, S.,Wei jiang., Bo Lu. (2012). Equity in centives ana Internal control weaknesses, November 15, No 48.pp.1-34
5)       Baltaci, Mustafa and Serder Yilmaz. (2006). Keeping an eye on sub- national governments: Internal control and audit at local levels, world bank institute, Washington,D.C, PP.1-35
6)       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
7)       Beckmann, D., & Menkhoff, L. (2008).Willwomen bewomen? Analyzing the gender difference among financial experts. Kyklos, 61(3), 364–384.
8)       Bellucci, A., Borisov, A., & Zazzaro, A. (2010). Does gender matter in bank–firm relationships? Evidence from small business lending. Journal of Banking & Finance, 34(12), 2968–2984
9)       Beneish, M. D., Billings,M. B., & Hodder, L. D. (2008). Internal ControlWeaknesses and Information Uncertainty. The Accounting Review, 83(3), 665–703.
10)    Beyer, A., Cohen, D. A., Lys, T. Z., &Walther, B. R. (2010). The financial reporting environment: Review of the recent literature. Journal of Accounting and Economics, 50(2–3), 296–343
11)    Bilimoria, D. (2000). Building the business case for women corporate directors. In R. J. Burke, & M. C. Mattis (Eds.), Women on corporate boards of directors: International challenges and opportunities (pp. 25–40). Dordrecth, The Netherlands: Kluwer Academic Publishers.
12)    Boulouta, Loanna. (2013). Hidden connections: The link Between Board Gender Diversity and corporate social performance. Journal of Business Ethics. 113(2). Pp.185-197
13)    Catalyst (2004). The bottom line: Connecting corporate performance and gender diversity. Research report sponsored by BMO Financial Group; Catalyst Publication Code D58 (ISBN # 0-89584-244-0).
14)    Cheng, M., Dhaliwal, D., & Zhang, Y. (2013). Does investment efficiency improve after the disclosure ofmaterial weaknesses in internal control over financial reporting?. Journal of Accounting and Economics, 56(1), 1–18..
15)    Clarke, C. J. (2005). The XX factor in the boardroom: Why women make better directors. Directors Monthly, August, 12–14.
16)    Ferdinand A.Gul., Bin Srinidhi, Anthony C.Ng. (2011). Does Board Gender Diversity improve the Informativeness of stock prices, Journal of accounting and Economics? 51(3): 314-338
17)    Garkaz, M. & Biabani, S.(2014). Imapct of Women on Board on Performance, Accounting and Auditing Science, 3(12): 63-74.
18)    Harjoto,M. A., Laksmana, I., & Lee, R. (2015). The impact of demographic characteristics of CEOs and directors on audit fees and audit delay. Managerial Auditing Journal, 30(8/9), 963–997.
19)    Hasas Yeganeh, Y., Nataj, T. & Malekshah, Gh.H. (2006). Relation between Internal Control Reporting and Investors’ Decision Making, Accounting Studies, 14: 1-44.
20)    Hejazi, R., Rahmani, A. & Bazrafshan A. (2015). Review of Internal Control on Financial Reporting with Audit Committee Emphasis, Accounting and Auditing Science in Management, 16: 63-74.
21)    Kaplan, S., Pany, K., Samuels, J., & Zhang, J. (2009). An examination of the association between gender and reporting intentions for fraudulent financial reporting. Journal of Business Ethics, 87(1), 15–30.
22)    Niederle, M., & Vesterlund, L. (2007). Do women shy away from competition? Do men compete too much?. The Quarterly Journal of Economics, 122(3), 1067–1101
23)    Ray, D. M. (2005). Corporate boards and corporate democracy. Journal of Corporate Citizenship, 2005(20), 93–105
24)    Rose, C. (2007). Does female board representation influence firm performance? The Danish evidence. Corporate Governance: An International Review, 15(2), 404–413.
25)    Sepasi, S. Abdoli, L. (2015). Impact of Gender on Conservatism. Women Social Studies, 14 (1):129-154
26)    Sepasi, S. Abdoli, L. (2015). Impact of women in Board on Companies’ Value and Financial Performance. Finacial Accounting and Auditing Studies, 8 (29):39-58
27)    Skaife, H. A., Veenman, D., &Wangerin, D. (2013). Internal control over financial reporting and managerial rent extraction: Evidence from the profitability of insider trading. Journal of Accounting and Economics, 55(1), 91–110.
28)    Srinidhi, B., Gul, F. A., & Tsui, J. (2011). Female directors and earnings quality. Contemporary Accounting Research, 28(5), 1610–1644.
29)    Zareii, H. (2002). Analytical Review of Weakness in Internal Control. Accountant, 147:19-22.