Board Diversity and the Demand for Higher Audit Effort
43 Pages Posted: 15 Mar 2009
Date Written: February 1, 2008
Abstract
We examine whether female corporate board membership affects the board's demand for audit effort measured by audit fees. After correcting for selectivity bias and controlling for other known board, firm and industry characteristics, we find significantly higher audit fees in firms that have at least one female director and in firms with a higher proportion of female directors on the board. The effect is also significant for female non-executive director presence and their proportion. Our findings suggest that boards with female directors are more likely to demand higher monitoring in the form of more audit effort, ceteris paribus. Exploratory analysis of the differential effect of female board membership suggests that such boards demand incremental audit effort in situations of high information asymmetry, complexity and ethical dilemma.
Keywords: Audit Fees, Corporate Governance, Female director, Gender diversity
JEL Classification: M41
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Audit Committee, Board of Director Characteristics, and Earnings Management
By April Klein
-
Audit Committee, Board of Director Characteristics, and Earnings Management
By April Klein
-
Audit Committee Composition and Auditor Reporting
By Joseph V. Carcello and Terry L. Neal
-
Corporate Governance and Accounting Scandals
By Anup Agrawal and Sahiba Chadha
-
Audit Committee Characteristics and Auditor Reporting
By Joseph V. Carcello and Terry L. Neal
-
Earnings Management and Corporate Governance: The Roles of the Board and the Audit Committee
By Biao Xie, Wallace N. Davidson, ...
-
Restoring Trust after Fraud: Does Corporate Governance Matter?
-
Board Characteristics, Accounting Report Integrity, and the Cost of Debt
By Ronald C. Anderson, Sattar Mansi, ...
-
Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?
By Mark L. Defond, Rebecca N. Hann, ...
-
Does the Market Value Financial Expertise on Audit Committees of Boards of Directors?
By Mark L. Defond, Rebecca N. Hann, ...