Earnings management in Italian family and non-family unlisted companies: the moderating effect of gender diversity

Purpose. Building upon the stakeholder theory, this paper aims to investigate the relationship between family control and earnings man-agement practices while considering the potential moderating effect of gender diversity on the Board of directors.Design/methodology/approach. Using a longitudinal sample of 1,461 manufacturing Italian Small and Medium-sized Enterprises over the period 2014-2020, we performed panel regression analyses to empir-ically investigate the relationship between earnings management, fam-ily firm status and the moderating effect of gender diversity on board.Findings. The empirical findings show that family firms are less likely to engage in the practices of earnings management than non-family firms are. The association between family firm status and earnings man-agement is moderated negatively by gender diversity.Practical and Social implications. This study emphasizes the criti-cal role of family control and board gender diversity in reducing finan-cial manipulation practices and improving accounting transparency. These findings offer practical guidance for implementing measures aimed at enhancing the quality of financial reporting in unlisted Small and Medium-sized Enterprises. Greater women’s representation on the family businesses board can promote accounting transparency and in-tegrity, carrying significant social implications.Originality of the study. This study contributes to the literature on the quality of financial information in both family firms and unlisted compa-nies, exploring new areas of research. The study is original also consider-ing the moderating variable chosen: to the best of our knowledge, no study has already explored the moderating influence of gender diversity on the relationships between family control and earnings management.