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 stronger 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). Collectively, these results indicate higher audit quality by female auditors.

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

JEL Classification: M42, J16, M41