Does Gender and Ethnic Diversity among Audit Partners Influence Office-Level Audit Personnel Retention and Audit Quality?

65 Pages Posted: 11 May 2020 Last revised: 30 Apr 2023

See all articles by Eric Condie

Eric Condie

Georgia Institute of Technology

Ling Lei Lisic

Virginia Tech - Pamplin College of Business

Timothy A. Seidel

Brigham Young University

J. Mike Truelson

Mississippi State University

Ally Zimmerman

Florida State University - Department of Accounting

Date Written: April 26, 2023

Abstract

Motivated by prior literature on organizational identification and 23 semistructured interviews with a variety of U.S. audit partners and directors, we examine whether the gender and ethnic diversity of an office’s audit partners influences the retention of the office’s audit professionals and the quality of the audits conducted by the office. Using hand-collected data on U.S. audit partners, we find that greater levels of (or changes in) diversity in office audit partners’ gender and ethnicity are associated with lower (reduced) turnover among office audit professionals and higher (increased) office-level audit quality. To provide further insight into the audit quality results, we conduct a path analysis based on the most common mechanisms highlighted in our interviews. The results indicate partial mediation through increased retention, greater gender and ethnic diversity among office audit personnel, client continuity, and increased efficiency. Further tests reveal that the association with audit quality is incremental to, and distinct from, the effect of individual engagement partner characteristics and does not reflect client screening. Collectively, the findings underscore the importance of gender and ethnic diversity among office audit partners to organizational outcomes and provide important practical implications for audit firms.

Keywords: diversity, leadership, audit quality, audit offices, audit partners, audit fees

JEL Classification: M41, M42

Suggested Citation

Condie, Eric and Lisic, Ling Lei and Seidel, Timothy A. and Truelson, Jonathan and Zimmerman, Aleksandra, Does Gender and Ethnic Diversity among Audit Partners Influence Office-Level Audit Personnel Retention and Audit Quality? (April 26, 2023). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3576668 or http://dx.doi.org/10.2139/ssrn.3576668

Eric Condie

Georgia Institute of Technology ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

Ling Lei Lisic

Virginia Tech - Pamplin College of Business ( email )

3007 Pamplin Hall
Blacksburg, VA 24061
United States

Timothy A. Seidel (Contact Author)

Brigham Young University ( email )

Provo, UT 84602
United States

Jonathan Truelson

Mississippi State University ( email )

Mississippi State, MS 39762
United States

HOME PAGE: http://www.business.msstate.edu/directory/jmt342

Aleksandra Zimmerman

Florida State University - Department of Accounting ( email )

Rovetta Business Bldg. (RBA)
College of Business
Tallahassee, FL 32306-1110
United States

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