
Purpose This study aims to examine whether Benevolent directors on the board influence corporate earnings quality (EQ). The authors further investigate the roles of chief executive officer (CEO) benevolence, gender and corporate governance mechanisms in the association between board benevolence and EQ. Design/methodology/approach Drawing from upper-echelon and ethical leadership theoretical perspectives, the study hypothesizes a positive association between board benevolence and earnings persistence (EP). Director benevolence is proxied by their involvement in not-for-profit leadership positions, simultaneously to corporate directorships. EQ is proxied through EP, which is the persistence of earnings and cash flows from current to future periods. Findings The analysis reveals a positive association between board benevolence and EP using a sample of Australian capital market firms from 2010 to 2019. Second, Benevolent CEOs, women CEOs and more independent directors on boards and audit committees strengthen the board benevolence–EP association. The findings are robust to entropy balancing, residual inclusion of board benevolence and instrumental variable regressions. Research limitations/implications The authors make a novel contribution to the financial reporting literature by documenting that the personal moral characteristics of corporate leaders, particularly those of the board of directors, significantly influence EQ. Originality/value The originality of the paper lies in viewing board composition through an understudied yet instrumental perspective: board benevolence. The findings will be insightful for policymakers seeking to enhance the quality of information in capital markets and for investors evaluating the financial information of firms.
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