CEO Dynamics and Real Earnings Management: A Gender Diversity Perspective from Sub-Saharan Africa

Sub-Saharan Africa's (SSA) corporate environment, like many emerging markets, is characterised by institutional voids, opaque oversight mechanisms, and patriarchal leadership structures, amplifying the risk of real earnings management (REM). This study investigates the relationship between CEO characteristics and REM within the manufacturing sector of SSA, emphasising the moderating role of audit committee gender diversity—a novel area of inquiry in the region's predominantly male governance landscape. Employing pooled ordinary least squares (OLS), random effects (RE), and fixed effects (FE) regression models, this research analyses 1,189 firm-year observations from 142 manufacturing firms across 13 SSA countries, covering the period from 2012 to 2022. The findings indicate that firms with female CEOs exhibit significantly lower levels of REM, aligning with theories of ethical leadership and risk aversion. CEO ownership and tenure do not show a statistically significant direct relationship with REM, whereas the impact of CEO nationality yields mixed results. Notably, gender-diverse audit committees substantially enhance oversight and effectively mitigate REM, particularly within firms led by male CEOs. To confirm the robustness of these findings, feasible generalised least squares (FGLS) estimation was employed, addressing potential heteroscedasticity and serial correlation in panel data. The consistent results across different estimation techniques affirm the reliability and validity of the observed governance–REM relationships. The study underscores the critical role of gender diversity in corporate governance frameworks, advocating policy reforms aimed at increasing female leadership and enhancing audit committee diversity to strengthen financial transparency. These insights contribute meaningfully to global discussions on ethical governance, providing actionable policy recommendations for emerging economies grappling with market fragmentation and governance challenges.