Audit Partner Gender Diversity and Audit Quality

Abstract

This study examines whether audit partner gender diversity has an impact on audit quality, using data from China, where each audit report is signed by a pair of audit partners. I argue that female and male partners promote professional skepticism in the form of diverse information, expertise, experiences and perspectives to an audit. Audit quality can be enhanced by incorporating these diverse resources into the audit process. Using this rationale, the positive effect of gender diversity on audit quality is likely to be stronger where the female and male partners have similar authority and thus the incorporation of diverse information and expertise of both partners is not impeded. Diverse information, expertise, and perspectives are more valuable in companies with complicated operations. Therefore, if my rationale holds, the improvement in audit quality is relatively higher in complex firms. Using the propensity to issue modified audit opinions as a proxy for audit quality, this study documents evidence supporting these propositions. It also finds that audit reporting lags are not significantly different between companies audited by the pairs of partners with diverse genders and those audited by the pairs of partners with homogenous gender, but gender-diverse pairs charge significantly higher fees than gender-homogenous pairs. These additional findings lend further support to the hypothesis that gender diversity enhances audit quality.

Date of Award	27 Jun 2017
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Chansog KIM (Supervisor) & Zhifeng YANG (Supervisor)