Evolving Gender Disparities in Auditing

Abstract

Both popular media and academic research have long asserted that the Big 4 audit firms (“the firms”) are “boys clubs” that fail to equitably retain and promote female auditors. Recently mandated Form-AP disclosures have reignited interest in gender disparities at the firms by revealing that, despite their explicit commitments to gender equity, only a small proportion of their public company engagements are led by female audit partners. We use newly available data on nearly 150 thousand rank-and-file auditors to show that these assertions about gender disparities at the firms were historically accurate. Throughout the 1990s and 2000s, female auditors faced lower retention and promotion rates than their male counterparts. These disparities were even more pronounced in auditing than in most other financial services professions. However, we also show that these disparities narrowed among auditors during the mid 2010s and reversed by the late 2010s. Indeed, we present evidence which suggests that from the late 2010s through the end of our sample period in 2023, it was male auditors who were at higher risk of leaving the firms and faced lower probabilities of promotion conditional on staying. The absence of a similar reversal in retention rates for other financial services professions during the same period bolsters our conclusion that the trends observed are not driven by broader industry or labor market factors.

All the code used to create this paper is publicly available at https://github.com/njhallman/Gender-public.

Keywords: gender, auditing, retention and promotion