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Advances in Social Sciences Research Journal – Vol. 12, No. 1
Publication Date: January 25, 2025
DOI:10.14738/assrj.121.18194.
Sakhil, A. D., Bajuri, N. H., Ali, S. T., Hasan, H. F., & Khalbas, H. N. (2025). The Effect of Gender Diversity on Asymmetric Cost Behaviour
Using Earnings Management as a Mediating Variable. Advances in Social Sciences Research Journal, 12(1). 146-165.
Services for Science and Education – United Kingdom
The Effect of Gender Diversity on Asymmetric Cost Behaviour
Using Earnings Management as a Mediating Variable
Ali Dakhil Sakhil
Azman Hashim International Business School,
Universiti Teknologi Malaysia, Johor Malaysia
Norkhairul Hafiz Bajuri
Azman Hashim International Business School,
Universiti Teknologi Malaysia, Johor Malaysia
Shireen Tawfeeq Ali
Faculty of Management,
Universiti Teknologi Malaysia, Johor Malaysia
Hussein Falah Hasan
Department of Accounting,
Dijlah University College, Baghdad, Iraq
Huda Nathim Khalbas
Department of Accounting,
Dijlah University College, Baghdad, Iraq
ABSTRACT
Examining how gender diversity affects asymmetric cost behaviour in non-financial
firms is the goal of the current study. Its primary objective is to ascertain whether
earnings management mediates the association between gender diversity and
asymmetric cost behaviour. The data utilised in this study came from 455 firm-year
observations from 35 non-financial sector businesses registered on the Iraqi Stock
Exchange from 2010 to 2022. The study employed ordinary least squares (OLS). The
results showed that asymmetric cost behaviour and earnings management are
unaffected by gender diversity. On the other hand, the results show that earnings
management is negatively associated with asymmetric cost behaviour. Thus, the
study fills the gap in the literature, especially in developing countries.
Keywords: Gender Diversity, Earnings Management, Asymmetric Cost Behaviour.
INTRODUCTION
The weakness of corporate governance, represented by board characteristics, had the greatest
impact on the collapse of major companies in the USA in 2008. Recent company failures and
financial scandals at Satyam in India and SK Networks in South Korea show corporate
governance's inability to improve earnings management [1] and [2]. So, earnings management
is a topic that worries investors [3]. Management’s behaviour in earnings management may
either weaken asymmetric cost behaviour because the legal system is not perfect, the agency
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Sakhil, A. D., Bajuri, N. H., Ali, S. T., Hasan, H. F., & Khalbas, H. N. (2025). The Effect of Gender Diversity on Asymmetric Cost Behaviour Using Earnings
Management as a Mediating Variable. Advances in Social Sciences Research Journal, 12(1). 146-165.
URL: http://dx.doi.org/10.14738/assrj.121.18194
problem is serious, or earnings management has become a common way for the management
of listed companies to achieve their own goals [4]. Recent research suggests that in
environments with inadequate investor protection and ineffective corporate governance, the
issue of asymmetric cost behaviour induced by accrual-based earnings management could
become more serious [5].
Understanding cost behaviour—how a firm's cost structure is influenced by changes in
business activity—is a crucial issue in cost accounting and management accounting; this
understanding significantly impacts the decision-making process [6]. However, asymmetric
cost behaviour is a topic that has drawn a lot of attention from scholars, particularly in America
and Europe and is regarded as a problem by investors. It is influenced by a variety of factors,
chief among them being board characteristics [7]. The motivations for asymmetric cost
behaviour can be categorised into two groups: one focusing on efficiency considerations related
to cost adjustment and emphasising the benefits for companies, and the other centred on
managerial opportunism with an emphasis on egoism or agency problems [2].
The first research on asymmetric cost behaviour started in the last century, with [8] presenting
evidence that the cost curve differs for the same change of activity; this could be the first
evidence of cost stickiness. Despite the recognition of disproportional cost that emerged in the
investigation of [9], the definition of cost stickiness was first coined by the (ABJ) Model
Anderson, Banker, and Janakiraman (2003) documented evidence of asymmetrical cost
behaviour, and it can be defined as a pattern of cost behaviour where costs increase more than
decrease, despite the equivalent amount of changes in the company’s activity. Attributing it to
deliberate managerial decisions in the presence of adjustment costs, i.e., proclaiming that cost
stickiness arises from optimal decisions regarding adjustment costs [10].
The main difference between traditional cost classifications and cost stickiness is that the
former is based on the relationship between the change in activity level, while the latter
considers the direction of the change [11]. This is because costs exhibit stickiness by increasing
more steeply with increasing sales revenue compared to the decrease in costs with the same
proportionate decrease in sales revenue [12]. The sticky cost model allows managers and
management accountants to adjust resources in response to changes in the volume of activity,
rather than responding proportionately and symmetrically to volume changes within the
relevant range. Cost stickiness is therefore characterized by asymmetric behaviour, as costs
tend to react differently to increases and decreases in the volume of activity [11] and [13].
Agency theory predicts that these managers may act opportunistically, leading shareholders to
put in a mechanism that can monitor firm managers, which also results in agency costs (ICAEW,
2005) [14]. According to [15], agency problems may lead to sticky behaviour of cost since
managers intentionally manipulate cost in reaction to changes in sales. [16] and [17] also argue
that managers deliberately manage production, which then leads to the sticky behaviour of
cost. Earnings management not only promotes the healthy development of enterprises but also
causes the separation of ownership and management rights inside enterprises, which further
leads to the conflict of interests between the two rights [18]. If profits decline rapidly, managers
tend to take unfair earnings management measures to reduce costs and cover up self-interested
behaviours to avoid paying fines and damaging reputations, thus resulting in cost stickiness
[19].
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However, to the best of our knowledge, few, if any, studies have examined the link between
board gender and asymmetric cost behaviour, particularly in the context of developed
countries. We fill this gap in the literature by investigating how board gender relates to
asymmetric cost behaviour by employing earnings management as a mediator in 35 non- financial sector businesses registered on the Iraqi Stock Exchange.
We hypothesise that board gender may decrease asymmetric cost behaviour. First, through
earnings management as a mediator variable. Secondly, firms with a higher fraction of female
directors exhibit lower agency costs since women may be less tolerant of opportunistic conduct
than men [20] and [21]. As sales decline, female executives will cut expenses more aggressively,
reducing their perquisite usage and resource control, thereby decreasing the asymmetric cost
behaviour. In the same vein, women are traditionally more risk-averse than men [22], [23], and
less likely to be overconfident [24]. Hence, they are more cautious when forecasting future
demand changes.
To the best of the researcher‘s knowledge, no studies have yet investigated the mediating
influence of earnings management on the association between board gender and asymmetric
cost behaviour. According to, [25], a substantial portion of the published studies on asymmetric
cost behaviour have focused on corporations in the United States and other developed
countries, while developing market enterprises have gotten less attention. and stressed the
importance of research focusing on asymmetric cost behaviour, especially in Arab countries
that rely heavily on the oil sector. Further study on ACs in developing countries with distinct
economic circumstances, such as Iraq, has thus become urgently necessary. Therefore, this
study intends to close a gap in previous research by examining the mediating influence of
earnings management on the association between gender diversity and asymmetric cost
behaviour in the setting of Iraq.
In this regard, Iraq is considered a developing country; hence, the research findings may not be
as important or applicable to Iraq. For instance, prior studies could not be applied to the issue
of Iraqi corporations due to the fact that Iraqi corporate governance laws differ from those of
other countries. Additionally, Iraq's financial reporting system and institutional structure differ
from those of developed countries. In Iraq and other emerging nations with comparable
economies, institutions, and legal frameworks, the study may thus have theoretical and
practical ramifications. Thus, in the context of Iraq, the primary goal of the study is to examine
the mediating influence of earnings management on the association between gender diversity
and asymmetric cost behaviour.
The remainder of the paper is structured as follows: The literature is reviewed in the next
section. The next part covers the data, sample, research methods, and variable measurement.
The next section presents the empirical findings. The final portion discusses the study results
and conclusion.
LITERATURE REVIEW
Gender Diversity and Asymmetric Cost Behaviour
The Global Gender Gap Index (GGGI), published by the World Economic Forum, is the most
widely used measure of gender disparity. The dataset has been updated annually since its
inception in 2006. The GGGI includes four aspects of gender inequality: political empowerment,
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Sakhil, A. D., Bajuri, N. H., Ali, S. T., Hasan, H. F., & Khalbas, H. N. (2025). The Effect of Gender Diversity on Asymmetric Cost Behaviour Using Earnings
Management as a Mediating Variable. Advances in Social Sciences Research Journal, 12(1). 146-165.
URL: http://dx.doi.org/10.14738/assrj.121.18194
health and survival, educational achievement, and economic involvement and opportunity.
Globally, the average GGGI score in 2016 was 0.68. Given that the GGGI counts gender equality
as one, this outcome supports the UNDP's gender inequality index, which states that more work
has to be done because there is still a significant gender gap in the globe in 2016 [26]. Because
of their interpersonal skills, female directors are more likely to interact with a variety of
stakeholders and respond to their requirements, which lowers corporate asymmetric cost
behaviour [27].
Over the past two decades, gender diversity has emerged as a central and challenging issue in
academia within the new global economy. [17] confirm that gender diversity in boardrooms,
particularly in large European corporations, has become a crucial topic in corporate
governance. Numerous empirical studies, particularly in developed capital markets and some
Asian economies, have explored the relationship between gender diversity and costs; some
studies have found negative relationships. For instance, [17], [28] [29], [30], [31], [32], [33],
[34], [35], [36] and [37]. Conversely, some empirical evidence shows a positive relationship
(see, e.g., [38], [39], [40], and [41].
[17], Do female directors mitigate asymmetric cost behaviour? Using an international sample
of firms across 37 countries from 1999 to 2018, they found that firms with more gender
diversity exhibit lower cost stickiness. That means more female directors decrease agency
issues and improve corporate governance, both of which alleviate asymmetric cost behaviour.
Similarly, [28], in their efforts to meta-analytically investigate the controversial relationship of
the impact of board diversity on cost, did an extensive and systematic literature review using a
sample of 211 non-financial companies listed on Borsa Istanbul; this study examined how
chairperson gender and board characteristics affect the cost of debt by using panel data analysis
from 2016 to 2020. A system-generalized method of the moment model was also applied to test
the endogeneity issue. The findings showed that the presence of female chairpersons and
female directors on the board reduces the cost of debt and the perceptions of default risk by
fund providers.
Similarly, [31] examined the impact of gender diversity on board-reducing agency costs.
Multiple regression analysis was used. The research used panel data consisting of 2,062 firm- year observations of 226 non-financial firms listed on the PSX from 2008 to 2019. The results
indicated that female presence on the board significantly reduces the agency cost and, hence,
mitigates the principal-agent conflict. This result supported the findings of [29], who examined
female directors and agency costs. This paper used a large sample of 23,340 firm-year
observations of Chinese listed companies during 2004–2017. The authors used ordinary least
squares regressions as the primary methodology with a wide range of methods, including the
fixed-effect method. The evidence revealed that the participation of female directors in
corporate boards reduces agency costs, which correlates with conflicts of interest. Moreover,
gender-diverse boards are more effective.
Conversely, [40] examined the effect of the board of directors on the cost of debt and the
moderating effect of ownership structure on that relationship. To test the hypothesis that the
board of directors reduces the cost of debt and ownership leads to an increase in the cost of
debt, the Ordinary Least Squares (OLS) regression method is applied. With a sample of 2,576
European SMEs (8,742 observations) over the period 2013 to 2018, the results reveal that
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board gender is positively associated with the cost of debt. These results suggest that increasing
board gender on SMEs' boards leads to a higher cost of debt. Likewise, the results of the studies
by [29] and [41] are similar to the results above.
On the other hand, gender has no impact on costs. [38] investigated the impact of CEO gender,
firm performance, and costs on firms’ financial reports in India. This study particularly focuses
on the gender diversity of the board of directors, chief executive officers, and chief financial
officers and spans from 1999 through 2015. Data for analysis were obtained from the Prowess
database; the results using descriptive statistics and panel regression analysis revealed that the
proportion of women on board has no impact on costs in company annual reports. That means
our results show that having a female CEO has a negative effect on firm performance in Indian
companies.
According to agency theory, proper management and gender diversity enhance oversight
functions and reduce agency costs, thereby improving company performance. However, the
relationship between gender and costs shows mixed results. Given the above discussion, if
gender diversity is associated with stronger monitoring, it should reduce asymmetric cost
behaviour. Therefore, the hypothesis is formulated as follows:
➢ H1: Gender on boards has a detrimental effect on asymmetric cost behaviour.
Gender Diversity and Earnings Management
Gender diversity has received growing attention throughout the last decade, and, in general,
there is a global call for the presence of women on corporate boards as a means of improving
corporate decision-making and governance [42]. Some countries have initiated a spate of
legislative changes requiring a predetermined representation of female directors on corporate
boards [43]. Indeed, the results of a few studies indicate that female directors tend to have a
positive influence on several corporate outcomes, such as earnings management and
performance [42] and [44] Nevertheless, earnings management is an important issue that has
long plagued corporations and continues to pose major concerns for the broader society.
The appointment of female directors is not only of great interest to policy-makers, politicians
and regulatory authorities but also to management, finance and accounting researchers. In
addition, the appointment of women to corporate boards is perceived to be ethically
appropriate and socially responsible corporate behaviour [45]. On the other hand—and
constituting the focus of our study—is that extant research shows that women have different
characteristics and skills compared to men (e.g., more vigilant and risk-averse, cautious,
conservative, fair, independent, objective and responsible) which place them in a better
position to intensely monitor executives compared with the position of male directors [46],
[47], and [48]. In this case, they argue that female directors are not only more likely to challenge
managerial opportunism but also will be better at doing so than their male counterparts [49].
A priori and due to their superior monitoring abilities (based on the predictions of economic
theories), the study expects the presence of female directors on audit committees to restrain
earnings management and improve the overall earnings quality. Meanwhile, the relationship
between female directors and earnings management is a relatively under-examined issue and
the results of the few studies that have attempted to address this question are generally
inconclusive (e.g., [50], [51], [52], [53], [54], [55], [56], [57], [58], and [59].
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Sakhil, A. D., Bajuri, N. H., Ali, S. T., Hasan, H. F., & Khalbas, H. N. (2025). The Effect of Gender Diversity on Asymmetric Cost Behaviour Using Earnings
Management as a Mediating Variable. Advances in Social Sciences Research Journal, 12(1). 146-165.
URL: http://dx.doi.org/10.14738/assrj.121.18194
Among studies that have found no discernible relationship, particularly those focusing on the
influence of board gender diversity on earnings management, for example [58], the study aims
to examine board diversity and its impact on the corporate performance of public companies
listed on the Amman Stock Exchange. The sample included 15 banks and 23 insurance
companies for the financial period (2010–2015). Results revealed a poor representation of
female holders as members of the board of directors. In the same context, the study concluded
that there is no impact of gender. These results are consistent with both [50], [51], [52], [53],
[54], [55], [56], [57], and [58].
On the other hand, among those studies that found no relationship except through the
mediation of accounting expertise, which investigates the impact of board gender on earnings
management in firms’ financial reports, this study was conducted by [43] and titled Gender
Diversity and Earnings Management. The sample starts in 2007 and runs until 2013. The
researchers obtain the required financial data from the annual Compustat file in the USA. The
study used the two-stage least squares (2SLS). The results show that the participation of female
directors just with relevant financial backgrounds improves earnings quality more than the
participation of female directors without such backgrounds. These results are consistent with
both [51], [54], [67], [59], and [55].
Contrarily, some empirical studies were conducted; for instance, a study conducted by [68]
titled The Gender Diversity and Earnings Management Practices used a sample of 100 listed
non-financial firms in Pakistan from 2013 to 2018. Interestingly, the results show that gender- diverse corporate boards further strengthen the effectiveness of women as members of the
audit committee in curtailing earnings management practices. Further, female CEOs are
strongly inclined to reduce earnings management, thereby ensuring an effective and
transparent managerial decision. In the same vein, research was conducted by [69] titled The
Relation between Audit Committee Characteristics and Earnings Management. Using a sample
of 80 non-financial Egyptian companies listed on the Egyptian Stock Exchange for the eight
financial years from 2012 to 2019. Using a multiple regression model to test the relationship
among the variables, the results provide evidence that Audit Committee gender has a negative
relationship with earnings management. These results are consistent with both [70], [71], [49],
[72], [73], [45], and [48].
According to what was mentioned, there are mixed results between gender and earnings
management. Although some extant literature suggests that the participation of female
directors within boardrooms is associated with less earnings management, it would be
interesting to see empirical evidence supporting or refuting this hypothesis in the context of
Iraqi companies. Therefore, the hypothesis will be as follows:
➢ H2: Board gender has a detrimental effect on earnings management.
Earnings Management and Asymmetric Cost Behaviour
The primary distinction between cost stickiness and traditional cost categories is that the latter
takes into account the direction of the change, while the former is based on the link between
the change in activity level [11]. This is due to the fact that expenses show stickiness, rising
more sharply as sales revenue rises than when costs fall proportionately with a drop in sales
revenue [12]. However, according to agency theory, these managers may take advantage of
opportunities, which would force shareholders to install a system that could keep an eye on
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company managers. This would also result in agency costs (ICAEW, 2005) [14]. Since managers
purposefully alter costs in response to shifts in sales, agency difficulties may result in the sticky
behaviour of costs [15].
Cost stickiness results from managers' tendency to use unethical earnings management
techniques to cut expenses and hide self-serving activity in order to avoid paying fines and
harming their reputations if profits drop off quickly [19]. Indeed, a few studies indicate that
earnings management tends to influence asymmetric cost negatively, for example [4], [7], [74],
[75], [76], [77], [4], and [78]. On the contrary, some studies have confirmed that earnings
management does not affect asymmetric cost, for example [13] and [77].
Likewise, referring to the study conducted by [76], this study empirically analyses the
relationship between cost stickiness and earnings transparency. The Korea Corporate
Governance Service (KCGS) evaluation scores are employed to measure CSM activities. This
study analyses 4383 firm observations during the 2011–2017 period. The empirical results
show that the relationship between cost stickiness and earnings transparency is significant in
the negative direction. This means that the stickier the costs of a firm, the lower the earnings
transparency of the firm. Similarly, a study by [4] titled The Influence Mechanism of Executive
Compensation Incentives on the Relationship Between Real Earnings Management and
Expense Stickiness, based on data from Chinese A-share-listed manufacturing companies from
2018 to 2020, a total of 378 listed companies. The study used the Pearson correlation
coefficient. The empirical results show that Chinese manufacturing enterprises’ real earnings
management level is negatively correlated with cost stickiness. In a similar vein, [74] examined
earnings quality and asymmetric cost behaviour on the Jakarta (JKSE). Earnings quality has
negative influences on asymmetric cost behaviour, according to this study. Similarly, [80] found
evidence indicating that both earnings management and sticky cost move in the opposite
direction, meaning as earnings management increases sticky cost diminishes. Consequently,
the more a firm indulges in earnings management, the less sticky its cost will be.
Contrary to a study by [14], this research was titled The Relationship between Real Earnings
Management and Cost Behaviour. The study employed a purposive sampling method. Fifteen
firms listed on the Ghana Stock Exchange were selected for the study. Data from the period of
2005 to 2014 was collected. The study finds Ghanaian listed firms' SG&A costs to be sticky and
also sees these firms manipulating earnings through REM. This study finds that REM through
discretionary expenses and production costs increases sticky SG&A costs. In accordance with
agency theory, this study proposes the following hypothesis in light of the inconsistent findings
of earlier research and the imperfections in Iraq's present legal system:
➢ H3: There is an inverse relationship between earnings management and asymmetric
cost behaviour.
➢ H4: Earnings management mediates and enhances the relationship between gender
diversity and asymmetric cost behaviour.
The theoretical framework of the study is shown in Figure 1.
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REV = Natural log of revenue.
DUM = A dummy variable with a value of 1 if the current year REV decreases (REV i,t / REV i, t- 1 < 1), and 0 otherwise.
CON = control variables. Here, the researcher mainly uses CAPR and TOBQ as control variables
because most of the variables used by existing studies have already been considered about
corporate governance. The details of CAPR and TOBQ are as follows:
CAPR = capital intensity, measured as the net value of fixed assets scaled by operating revenue;
TOBQ = growth rate, measured as Tobin’s Q, where i indicates firm and t indicates year Hence,
the researcher restates model (1) as follows:
Model (2)
log [
SGAi,t
SGAi,t−1
] = β0
+ β1 log [
REVi,t
REVi,t−1
] + β2DUM
∗ log [
REVi,t
REVi,t−1
] + β3DUM ∗ CAPRi,t
∗ log [
REVi,t
REVi,t−1
] + β4DUM ∗ TOBQi,t ∗ log [
REVi,t
REVi,t−1
] + εi,t
In this model, the coefficient β1 represents the percentage increase in selling, general and
administrative expenses as a result of a 1% increase in revenue, and β1 + β2 represents the
percentage decrease in selling, general and administrative expenses as a result of a 1% decrease
in sales revenue. If selling, general, and administrative expenses are sticky, the percentage
increase in expenses during periods of increasing revenue should be greater than the
percentage decrease in expenses during periods of decreasing revenue.
According to the definition of asymmetric cost behaviour, a significant negative sign of β2 in a
model (2) indicates the existence of asymmetric cost behaviour.
Mediator Variable: Earnings Management (EM):
Earnings management is a mediator variable. Drawing from previous literature, this study uses
the modified Jones model to estimate discretionary accruals as a measure for the extent of EM
[86] [59] [87] .
TAt
At − 1
= a1 (
1
At − 1
) + a2 [
(ΔREVt − ΔRECt)
At − 1
] + a3 (
PPEt
At − 1
) + εit
Where:
TAt—total accruals, measured as the difference between net profit and operating cash flows
from activities; At-1—total assets at the end of year t-1; ∆REVt—the difference in operating
revenues in year t and year t − 1; ∆RECt—the difference in net receivables in year t and year t- 1; PPEt—property plant and equipment at the end of year t.
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Sakhil, A. D., Bajuri, N. H., Ali, S. T., Hasan, H. F., & Khalbas, H. N. (2025). The Effect of Gender Diversity on Asymmetric Cost Behaviour Using Earnings
Management as a Mediating Variable. Advances in Social Sciences Research Journal, 12(1). 146-165.
URL: http://dx.doi.org/10.14738/assrj.121.18194
Independent Variables: Gender Diversity (GD):
Board gender is the study's independent variable. Prior research indicates that the study
assessed this variable. If a female board member is present, 1; if not, 0. [28], [88], [89] and [45].
Control Variables:
This paper controls the impact of three firm-specific characteristics as suggested by prior
studies: firm size (FS), leverage (LEV), and (Tobin's Q). In line with previous research aligning
with the size hypothesis, this study incorporates firm size as a control variable, recognizing its
potential influence on earnings manipulation [73], [78], [90], [91] and [92]. Firm size is
quantified through the natural logarithm of a firm's total assets. In the same vein, previous
investigations, such as those by [76], establish a positive correlation between leverage ratios
and earnings manipulation. Consequently, the study incorporates the leverage ratio as a control
variable; the leverage ratio measures a firm’s total liabilities to its total assets. Finally, firm
value and performance are included as control variables, measured by Tobin's Q and the
natural logarithm of total assets [78], [35] and [27].
Regression Model
The association between gender and asymmetric cost behaviour using earnings management
as a mediating variable of Iraq-listed non-financial firms was examined using four models in
this study. Using model 1, the following analysis was done to assess the direct association
between gender and asymmetric cost behaviour. Using model 2, the following analysis was
done to assess the direct association between board gender and earnings management. Using
model 3, the following analysis was done to assess the direct association between earnings
management and asymmetric cost behaviour. Finally, using model 4, the following analysis was
done to assess the non-direct association of the effect of gender on asymmetric cost behaviour
using earnings management as a mediating variable.
The first regression model will examine the relationship between board gender and
asymmetric cost behaviour.
Model 1
STICKY i,t = β0 + β1 GD i,t + β2 SIZE i,t + β3 LEV i,t + β4 TOBQ i,t + ε i,t
The second regression model will examine the relationship between board gender and earnings
management.
Model 2
EM i,t = β0 + β1 GD i,t + β2 SIZE i,t + β3 LEV i,t + β4 TOBQ i,t + ε i,t
The third regression model will examine the relationship between earnings management and
asymmetric cost behaviour.
Model 3
STICKY i,t = β0 + β1 EM i,t + β2 SIZE i,t + β3 LEV i,t + β4 TOBQ i,t + ε i,t
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Table 5: Recreation analysis results for the impact of earnings management on
asymmetric cost behaviour.
The fourth hypothesis in this study is the effect of board gender (BG) on asymmetric cost
behaviour (ACB) using earnings management (EM) as an intermediary variable. The model
used is the (ABJ) Anderson, Banker, and Janakiraman (2003). The results of the investigation
GD: The coefficient of GD is shown to be 0.030 and positive, indicating a slight but not
statistically significant positive effect (Prob = 0.172). In a similar vein, EM (earnings
management): The impact of EM on the dependent variable is positive and estimated at 0.316,
with relative statistical significance (Prob = 0.086). Also, the interactive variable EM*GD has a
negative coefficient (-0.110) and a non-statistical significance (Prob = 0.286), indicating that
the interactive effect between gender and earnings management is not strongly significant in
influencing irregular costs. The fact that the p-value is greater than 0.05. The H4 is therefore
rejected. According to the results of the regression analysis conducted to test hypothesis No. 4,
Table 6 demonstrates that after moderating the influence of board gender on ACB, the data
indicate that EM has no discernible effect on it. The findings are that EM has a stronger direct
effect on ACB than the indirect effect of gender.
Table 6: Recreation analysis results for the impact of gender diversity on earnings
management and asymmetric cost behaviour.
Variable Coefficient Std. Error t-Statistic Prob. VIF
C 1.315 0.408 -0.772 0.098 -
EM 0.316 0.206 1.535 0.086 3.627
GD 0.030 0.039 0.213 0.172 1.184
EM*GD -0.110 0.174 -0.202 0.286 4.086
F Size 0.012 0.018 0.688 0.047 2.175
LEV -0.015 0.007 -2.253 0.048 1.481
TOBQ 0.000 0.000 1.063 0.031 1.324
R-squared 0.453 Adjusted R-squared 0.426
F-statistic 4.075 Prob (F-statistic) 0.000
Durbin-Watson stat 1.972
CONCLUSIONS
Gender diversity has become a major topic of interest around the world in recent years due to
its positive effects on companies. The existence of gender inequality and the possible causes
thereof remain an important topic due to intense debate in recent years among academics and
practitioners. Empirical evidence has shown that corporate governance mechanisms in many
companies, particularly in developed markets, play an important role in reducing the cost and
Variable Coefficient Std. Error t-Statistic Prob. VIF
C 1.235 0.192 -1.226 0.047 -
EM -0.257 0.112 -2.294 0.028 1.133
F Size 0.010 0.008 1.137 0.039 1.043
LEV -0.015 0.011 -1.412 0.047 1.059
TOBQ 0.041 0.0055 3. 375 0.002 1.235
R-squared 0.565 Adjusted R-squared 0.513
F-statistic 5.865 Prob (F-statistic) 0.000
Durbin-Watson stat 2.016
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Sakhil, A. D., Bajuri, N. H., Ali, S. T., Hasan, H. F., & Khalbas, H. N. (2025). The Effect of Gender Diversity on Asymmetric Cost Behaviour Using Earnings
Management as a Mediating Variable. Advances in Social Sciences Research Journal, 12(1). 146-165.
URL: http://dx.doi.org/10.14738/assrj.121.18194
financial distress of companies. Asymmetric Cost Behaviour (ACB) is an important issue in
accounting and economics research. The literature has shown that ACB cannot be separated
from managers' motivations. This study extends the asymmetric cost behaviour literature by
providing new evidence from emerging economies and by investigating the influence of board
characteristics as one of the CG mechanisms. Using the Iraqi market setting, the present study
investigates board gender matters in reducing earnings management and asymmetric cost
behaviour of non-financial companies listed in Iraq for the period 2010 to 2022. Results
indicate that COGS behaviour is sticky; it increases (1.05%) more than it decreases (0.85%)
with a 1% activity change. Further, board gender did not affect earnings management and
asymmetric cost behaviour. We also analyze the influence of earnings management on
asymmetric cost behaviour. Find that EM has a negative effect on ACB. Additionally, the data
show that EM has no appreciable impact on ACB after controlling for the role of board gender.
The results show that EM has a greater direct impact on ACB than gender's indirect influence.
Investors and analysts should take into consideration asymmetric cost behaviour when
conducting earnings forecasts. The overall conclusion is that ACB is a prevalent cost behaviour
in emerging economies and in developed ones and that CG could affect managers’ decisions
regarding resource adjustment when activity changes.
LIMITATIONS AND FUTURE RESEARCH
There are several restrictions on this study. They must specifically take into account board
characteristics that strengthen board oversight procedures and raise the calibre of results since
they might boost investor trust. We did not include characteristics of the board directors, such
as accounting expertise, nationality, education, and independence. Further research is still
needed to investigate the relationship between gender and earnings management and
asymmetric cost behaviour. The researcher finds a paucity of studies that investigate this
relationship. Future studies may use these data to offer more insightful results. The results of
this one should be treated with caution. First, there can be potential inaccuracies in the
variables' measurements. Discretionary accruals, for example, served as a stand-in for EM.
Furthermore, given the limitations of the modified Jones model utilised in this study to quantify
EM, future research may examine alternative models to estimate EM. Measuring methods may
have varied in earlier research. Second, more research can take into account the potential
omission of other control factors that could influence earnings management (EM) and
asymmetric cost behaviour (ACB). Third, the sample came from a developing nation with
comparatively weak institutional and legal frameworks. Fourth, the current study only looked
at non-financial companies; further research on financial and non-financial companies may be
conceivable. Fifth, the present study focuses only on Iraq; future research could cover other
emerging markets. Lastly, because institutional frameworks and corporate governance norms
are always changing, the results might not be applicable to other eras.
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