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Internal dealings might shape female directors’ incentives to affect corporate financial policies. This study aims to explore what impact female directors have on corporate cash holdings in the presence of internal dealings.

The authors apply panel data regressions that allow them to address endogeneity concerns. The initial sample includes all non-financial Spanish listed firms from 2005 to 2019.

Conditional on the existence of internal dealings, the authors show that the presence of two or more female directors decreases corporate cash holdings. Results seem consistent, with independent female directors becoming an effective monitoring mechanism for corporate financial policies in the presence of internal dealings. Furthermore, the findings could be explained by independent female directors providing valuable resources and external linkages, which, in the presence of internal dealings, help to reduce the firm’s need to hold cash to cope with external uncertainties.

The results provide practical implications by suggesting that in the presence of internal dealings, regulators and policy makers should pay greater attention to board gender diversity so as to reduce agency problems associated with free cash flows. The authors also contribute to prior academic debate regarding the importance of female directors in providing critical resources and external linkages to cope with uncertainty and to the importance of considering not only the presence of women on boards but also their number and specific roles.

The authors' work meets the increasing demand for more research on gender diversity to better capture the potential benefits that may result from appointing women on boards. To the best of the authors' knowledge, this is the first study to examine the influence of female directors on corporate cash holdings in the presence of internal dealings.

This study aims to analyse the effect of related party transactions (RPTs) on earnings quality in a sample of Spanish listed firms, as well as the moderating role played by female directors in the relationship between RPTs and earnings quality.

The sample includes non-financial Spanish listed firms from 2005 to 2019. The authors use panel data analysis based on the firm fixed-effect estimator. Additionally, the authors use the two-step system generalized method of moments estimator to test the robustness of the results.

The results show a negative effect of RPTs on earnings quality. Further analysis reveals that the negative effect is mainly driven by transactions between the firm and its directors and major shareholders, as well as by RPTs that are more likely to reflect insiders’ self-interest. Moreover, the authors show that the presence of female directors reduces the negative impact of RPTs on earnings quality.

The study provides practical implications for investors, auditors and policymakers, who should be aware that RPTs might harm earnings quality and adversely affect the flow of financial capital to promising investment opportunities. Additionally, the study evidences the key governance role played by female directors regarding financial reporting policies as RPTs increase.

The findings promote the need for a higher representation of women in leadership positions since the authors reveal the key governance role played by female directors regarding financial reporting policies as RPTs increase.

The results to emerge from the study complement available evidence concerning the effect of RPTs on earnings quality in a continental European country. The authors also provide novel evidence vis-à-vis the role of female directors in the relationship between RPTs and earnings quality.

Extant literature investigating the tax payment behaviour of politically connected firms largely supports the notion that politically connected firms have tax sheltering incentives, i.e. politically connected firms pay significantly less tax. Our paper adds to this stream of literature by considering the tax payment behaviour of two different groups of politically connected firms in Pakistan, viz. civil connected firms and military connected firms.

The paper sheds light on the tax payment behaviour of politically connected firms and provides evidence that the tax incentives of politically connected firms are shaped by the institutional structure and contextual factors.

The results indicate that civil (military) connected firms pay significantly lower (higher) tax than non-connected firms. The findings hold in the face of a number of robustness tests, including the use of alternative proxies for the tax variable and endogeneity concerns.

These results make a significant contribution to the existing literature examining the tax payment behaviour of politically connected firms by providing evidence suggesting that tax sheltering is not the only viable option for politically connected firms; rather, some groups of connected firms have tax under-sheltering incentives. Our findings add to the political cost hypothesis and the signalling hypothesis in relation to tax payment incentives of politically connected firms.