Does Gender Composition of the Audit Workforce Matter? An Examination of Audit Quality

Abstract

This study presents large-scale archival evidence on the relation between gender composition of audit workforces and audit quality. Using data on 20 large U.S. accounting firms from 2010 to 2018, we find a positive association between offices with a greater proportion of female auditors and audit quality. This result is driven by offices with a greater proportion of female staff (i.e., non-managerial and non-partner) auditors and is more pronounced in locations with more supportive environments for female auditors. We also find offices with a greater proportion of female auditors are associated with lower audit fees and faster audit delivery, suggesting clients are not compromising audit economics for audit quality. Our results are robust to controlling for office-level characteristics, working conditions, gender diversity, and alternative fixed effects, including MSA, auditor, and client fixed effects. These findings indicate that the gender composition of audit office workforces, particularly of rank-and-file audit staff, can serve as a salient leading indicator of audit quality.

Keywords: Audit quality, audit workforce, female auditors, gender composition

JEL Classification: G28, G38, J1, M42