Female Accounting Employees and Internal Control Quality

Abstract

We examine the association between the gender of accounting employees and internal control quality. Using novel data on corporate accounting employees, we find that firms with a higher proportion of female accountants are less likely to have future internal control weaknesses. This association is robust to using entropy balance matching and an instrumental variable approach that exploits variation in the external supply of female accountants. Additional analyses indicate that firms with a higher proportion of female accounting employees have fewer future financial restatements and higher accruals quality. Finally, we find that female accountants are less likely than their male counterparts to separate from their firms after internal control weaknesses. Overall, our evidence suggests that female accounting employees are associated with higher internal control quality.

Keywords: female employees, accounting employees, internal control quality

JEL Classification: M40, M41