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This study aims to examine the influence of board gender diversity on audit quality demand, considering auditor choice and audit efforts within the Gulf Co-operation Council (GCC) countries. It further examines the role of political connections and the impact of gender equality policy initiatives on this relationship.

Fixed-effects regression models are employed in a sample of 1,822 firm-year observations for financial firms across the GCC from 2011–2022 to test the hypotheses. Moreover, the two-stage-least-squares and the propensity score matching methods are used for sensitivity analysis.

The study shows a negative relationship between board gender diversity and the demand for audit quality, reflected auditor choice and audit efforts. However, the study shows a positive association between firm’s political connections and audit quality demand, which is more pronounced in gender-diverse boards. Policy initiatives for gender equality show no significant effect on the relationship between board gender diversity and audit quality demand.

The results inform governments, policy-makers, regulatory authorities and corporations by providing new evidence on the relationship between board gender diversity and the demand for audit quality, as well as the moderating role of political connections and policy initiatives in this relationship. To promote the meaningful participation of female directors in board decision-making, the findings indicate that gender stereotypes, both explicit and implicit, that can hinder female directors’ influence in board decision-making need to be addressed. Second, the study underscores for governments, policy-makers regulatory authorities and corporations that the mere appointment of female directors does not necessarily ensure their engagement in board decision-making. The appointment of female directors should go beyond symbolism and translate into meaningful engagement and influence with the board.

This study contributes to the corporate governance literature by offering new insights on the link between board gender diversity and the demand for audit quality. Beyond confirming a negative relationship between board gender diversity and the demand for quality audit, this study provides new insights on the moderating role of a firm’s political connections on this relationship. In addition, existing studies are primarily based on firms in Western countries and cannot be generalized due to differences in governance and legal structures. Given that the GCC countries have different cultures, economies, institutions, governance practices and norms compared to developed and emerging countries, our study offers a pertinent discussion on the relationship between board gender diversity and the demand for audit quality, as well as the moderating role of political connections in this relationship in the GCC countries.

The purpose of this study is to examine the influence of corporate governance (CG) mechanisms on earnings management (EM) within the Gulf Co-operation Council (GCC) countries. In addition, the impact of firm’s political connections (PCs) on EM is investigated, as well as whether it moderates the relationship between CG and EM.

Fixed-effects model is used on a sample of non-financial firms across the GCC countries to test the hypotheses. Moreover, a two-stage least squares method and a propensity score matching procedure are used to mitigate potential reverse causality and sample selection bias.

This study reveals that CG mechanisms such as board size and board independence are negatively associated with EM, while CEO duality is positively association with EM. In addition, this study shows that institutional ownership and blockholders do not influence EM. Furthermore, PCs are shown to play a moderating role in the relationship between CG and EM. The results of this study are robust to endogeneity testing and to alternative measures of CG.

Because of a lack of data, the authors do not consider additional CG attributes such as tenure, education and age of board members. Future research could explore the impact of these attributes when data becomes available.

This study provides valuable insights for government officials, policymakers, standard-setters, regulators and corporations by presenting new evidence on the relationship among CG, PCs and EM. Moreover, this study underscores that, in the absence of a strong institutional infrastructure and investor protection, relying solely on strong CG and Islamic values and GCC culture may have a limited impact on effective monitoring of opportunistic managerial behaviors.

This study contributes to existing literature with a specific focus on the unique political, legal, institutional, social and cultural setting of the GCC region. Moreover, this study provides new insights that PCs serve as a governance mechanism in mitigating EM because relatively little attention has been given to the impact of PCs in improving accounting outcomes, especially in the context of the GCC region where Islamic ethical norms often shape business practices.