Does Female Representation on Audit Committees Affect Audit Fees?

Quarterly Journal of Finance and Accounting, Vol. 49, No. 3-4, pp. 113-139, 2010

45 Pages Posted: 10 Dec 2008 Last revised: 28 Apr 2012

See all articles by Kim Ittonen

Kim Ittonen

Hanken School of Economics - Department of Accounting

Johanna Miettinen

University of Vaasa - Department of Accounting and Finance

Sami Vähämaa

University of Vaasa

Date Written: June 29, 2011

Abstract

This paper examines the association between female audit committee representation and audit fees. We hypothesize that gender diversity on audit committees has implications for external auditing, and thus affects audit fees. Using a sample of the S&P 500 firms, we find considerable evidence to suggest that firms with female audit committee chairs have significantly lower audit fees. From the audit demand perspective, our findings may indicate that female audit committee chairs reduce the need for assurance provided by external auditors. Alternatively, from the supply-side perspective, female chairs and committee members may decrease audit fees by affecting the auditor’s assessment of audit risk, for instance, by improving the effectiveness of internal control activities or by generally enhancing the integrity of the financial reporting process. If female representation reduces the inherent risk of misstatements, gender diversity on audit committees may be negatively associated with audit fees.

Keywords: gender diversity, audit fees, audit committees, corporate governance

JEL Classification: M42, G30

Suggested Citation

Ittonen, Kim and Miettinen, Johanna and Vähämaa, Sami, Does Female Representation on Audit Committees Affect Audit Fees? (June 29, 2011). Quarterly Journal of Finance and Accounting, Vol. 49, No. 3-4, pp. 113-139, 2010 , Available at SSRN: https://ssrn.com/abstract=1314243

Kim Ittonen

Hanken School of Economics - Department of Accounting ( email )

FI-00101 Helsinki
Finland

Johanna Miettinen

University of Vaasa - Department of Accounting and Finance ( email )

P.O. Box 700
FIN-65101 Vaasa, FI-65101
Finland

Sami Vähämaa (Contact Author)

University of Vaasa ( email )

P.O. Box 700
Vaasa, FI-65101
Finland
+358 29 449 8455 (Phone)

HOME PAGE: http://www.uwasa.fi/~sami

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