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The literature documents a shortage in the supply of external funding to small- and medium-sized enterprises (SMEs) in general and to innovative SMEs in particular. This study separates cognitive from financial constraints on innovative SMEs’ growth opportunities. Using data gathered through in-depth interviews with the CEOs of 115 SMEs, we reveal that over and above a problem with supply, there exists a twofold problem on the demand side. Specifically, we document that there is a tendency for these companies to avoid approaching external funding sources, especially ones that gear their investments toward innovation. Our results reveal a cognitive bias (over-pessimism) affecting the entrepreneurs’ (lack of) demand for external financing over and above other firm-specific factors. CEO tenure — our proxy for human and social capital — is significantly lower (higher) in firms that did (did not) pursue external funding. This finding may provide some support for our hypothesis regarding the cognitive bias and over-pessimism of the more veteran CEOs who have had negative experiences regarding recruiting external resources. The impact of this entrepreneurial cognition is shown to be economically detrimental to the enterprise. Nevertheless, the negative effects are not limited to the micro level, but have implications at the macro level as well, due to under-realization of the potential for employment, productivity, and growth of the firms comprising the vast majority of the economy.

This study, based on a merger of gender and accounting theories, aims to explore whether and how earnings management is affected by the presence of female directors on the board of directors and on the audit committee.

The study employs both a univariate and multivariate analysis approach to explore the relation between female directors and earnings management in high‐technology firms. In the analysis, two contemporary ex‐post measures of earnings management, discretionary accruals and nonoperating accruals, as well as two ex‐ante measures of earnings management, Big4 auditor and financial leverage are applied.

The paper finds evidence for a negative relation between the presence of female directors and earnings management. The findings indicate that accounting aggressiveness is affected by the proportion of women on the board of directors as well as on the audit committee. Furthermore, the paper find evidences indicating that earnings management is lower when either the CEO or the CFO is a woman. Notably, in firms with a higher female representation in corporate governance and/or in top management, external monitoring by auditors and creditors seems to be weaker, yet earnings quality is higher. Additional analysis suggests that the gender of directors has value implications for analysts and investors; specifically, there is a positive relation between the proportion of female directors and the firm's value. The findings are supported by several gender theories and findings regarding women's motivation and achievement, moral values, social stereotypes and the relation between task performance and self‐confidence.

This study associates the gender of directors with earnings management by firms. The study contributes to the growing body of literature on earnings management. It should be useful to researchers, regulators, investors, analysts and creditors as well as other players in the capital markets, as it presents a new and important aspect that needs to be accounted for when assessing the quality of firms' accounting information.