Board Gender Diversity and Going Concern Audit Opinions

31 Pages Posted: 4 Jan 2012 Last revised: 26 Nov 2019

See all articles by Larelle Law Chapple

Larelle Law Chapple

QUT School of Business; Financial Research Network (FIRN)

Pamela Kent

University of Queensland - Business School

James Routledge

Hitotsubashi University

Date Written: January 3, 2012

Abstract

This paper examines the relation between gender diversity on the board of directors and the likelihood that a company receives an emphasis of matter going concern audit opinion. Gender diversity on the board and the audit committee is examined. We find that, after controlling for the strength of corporate governance and relevant financial characteristics, boards with at least one female director are less likely to receive an emphasis of matter going concern opinion. We attribute this result to the improved monitoring that the board is able to provide as a result of the qualities brought to bear by female directors. In regard to the audit committee, we find that the presence of a committee is associated with an increased likelihood of an emphasis of matter going concern opinion and that this relation is strengthened by the existence of a female audit committee member. This finding is indicative of the important role of the audit committee in relation to the integrity of financial reporting and that the existence of female members on the committee expectation enhances its operation.

Keywords: corporate governance, going concern, inherent uncertainty, board composition, gender diversity

JEL Classification: M40, M48

Suggested Citation

Law Chapple, Larelle and Kent, Pamela and Routledge, James, Board Gender Diversity and Going Concern Audit Opinions (January 3, 2012). 2012 Financial Markets & Corporate Governance Conference, Available at SSRN: https://ssrn.com/abstract=1979040 or http://dx.doi.org/10.2139/ssrn.1979040

Larelle Law Chapple

QUT School of Business ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Pamela Kent

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia
+016 7 3365 6611 (Phone)
+016 7 3365 6788 (Fax)

James Routledge (Contact Author)

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

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