Moderating Effect of Board Gender Diversity on the Relationship between ESG Disclosure and Earnings Quality: Insights from Emerging African Economies

Abstract

This study investigates the moderating role of board gender diversity in the relationship between Environmental, Social, and Governance (ESG) disclosure and earnings quality in emerging African economies, focusing on Nigeria and South Africa. Drawing on Upper Echelons Theory, Stakeholder Theory, and Resource Dependence Theory, the study employs panel data from 2012 to 2021 and applies a fixed effects regression model. Earnings quality is proxied by accruals, while ESG disclosure is measured using a composite index and its individual components. The results reveal that ESG disclosure has a positive and statistically significant effect on earnings quality, indicating that increased transparency reduces earnings management and enhances financial reporting credibility. Further analysis shows that environmental, social, and governance disclosures individually contribute to improved earnings quality. Importantly, the findings demonstrate that board gender diversity significantly strengthens the ESG–earnings quality relationship. Firms with higher female representation on boards exhibit a stronger positive association between ESG disclosure and earnings quality, suggesting enhanced monitoring effectiveness and ethical oversight. The study contributes to the literature by providing empirical evidence from the African context, where governance structures and regulatory enforcement remain evolving. It highlights the complementary role of ESG disclosure and gender-diverse boards in improving financial reporting quality. The findings offer practical implications for policymakers and corporate managers, emphasising the need to promote gender diversity and ESG reporting as strategic tools for enhancing transparency and investor confidence in emerging markets.