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

38 Pages Posted: 9 Jan 2020 Last revised: 17 Mar 2024

See all articles by Chuchu Liang

Chuchu Liang

University of California, Irvine - Paul Merage School of Business

Ben Lourie

University of California, Irvine

Alex Nekrasov

University of Illinois Chicago

Date Written: March 4, 2024

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 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 an entropy balanced sample and an instrumental variable approach that exploits variation in the external supply of female accountants. Our study is among the first to provide large-sample archival evidence that characteristics of accounting employees matter to financial reporting and how these effects differ from non-accounting employees.

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

JEL Classification: M40, M41

Suggested Citation

Liang, Chuchu and Lourie, Ben and Nekrasov, Alexander, Does the Risk Aversion of Accountants Matter? Female Rank-and-File Accounting Employees and Internal Control Quality (March 4, 2024). Journal of Accounting and Public Policy, Forthcoming, 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 (Contact Author)

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/

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