Auditor Gender and Corporate Earnings Management Behavior in Private Finnish Firms

Abstract

The purpose of this paper is to investigate whether auditor gender has an impact on the magnitude of corporate earnings management in small and medium-sized private Finnish firms. Our results concerning gender differences in audit practices are twofold. First, when we regress the absolute (unsigned) earnings management on a gender dummy and a set of control variables, we find that female auditors allow for more discretion in income reporting than their male colleagues. When the analysis is conducted separately for sub-samples of income increasing and income decreasing discretionary accruals, the results suggest that female auditors are more conservative than their male colleagues.