Do (Fe)Male Auditors Impair Audit Quality? Evidence from Going-Concern Opinions

Abstract:     
Recent research indicates that there may be a relationship between the characteristics of the audit engagement partner and audit quality. In this paper, we examine the relationship between audit quality and the presence of a female or male audit engagement partner. We use the likelihood that an auditor issues a going-concern opinion (GCO), conditional on the client’s financial situation, as an indicator of audit quality. Using a sample of 7,105 financially distressed, private Belgian companies, we find that female auditors are, ceteris paribus, more likely to issue GCOs than male auditors. Our results also show that this effect is strengthened when clients are either important (i.e., represent a material portion of the auditor’s revenues) or high-risk (i.e., associated with increased uncertainties and risks). Female auditors also appear to have lower rates of audit errors, indicating higher reporting accuracy. Collectively, these results indicate higher audit quality by female auditors.

Number of Pages in PDF File: 55

Keywords: audit quality, auditor independence, audit opinion, sex differences

JEL Classification: M42, J16, M41

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