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
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: Suggested Citation