Does the Risk-Aversion of Accountants Matter? Female Rank-and-File Accounting Employees and Internal Control Quality

40 Pages Posted: 9 Jan 2020 Last revised: 17 Jun 2022

See all articles by Chuchu Liang

Chuchu Liang

University of California, Irvine - Paul Merage School of Business

Ben Lourie

University of California, Irvine

Alexander Nekrasov

University of Illinois Chicago

P. Eric Yeung

Cornell University - Samuel Curtis Johnson Graduate School of Management

Date Written: December 5, 2019

Abstract

Using novel data on corporate accounting employees, we find that the risk-aversion of rank-and-file accounting employees, proxied by the proportion of female accountants, is negatively associated with the likelihood of future internal control weaknesses. The results are incremental to controlling for other accounting employee characteristics such as experience and quality, which are also associated with fewer internal control weaknesses. In contrast, female non-accounting employees explain operating risk and not internal control risk. We mitigate endogeneity concerns by using entropy balance matching and an instrumental variable approach that exploits variation in the external supply of female accountants. Finally, we provide evidence that internal control quality matters to rank-and-file accounting employees. Accountants are more likely to turn over when their firms have internal control weaknesses

Keywords: accounting employees, employee risk aversion, female employees, internal control quality

JEL Classification: M40, M41

Suggested Citation

Liang, Chuchu and Lourie, Ben and Nekrasov, Alexander and Yeung, P. Eric, Does the Risk-Aversion of Accountants Matter? Female Rank-and-File Accounting Employees and Internal Control Quality (December 5, 2019). Available at SSRN: https://ssrn.com/abstract=3504465 or http://dx.doi.org/10.2139/ssrn.3504465

Chuchu Liang

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697
United States

Ben Lourie

University of California, Irvine ( email )

Irvine, CA 92697-3125
United States

Alexander Nekrasov

University of Illinois Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

HOME PAGE: http://business.uic.edu/profiles/alexander-nekrasov/

P. Eric Yeung (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States

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