Does Auditor Gender Affect Issuing a Going-Concern Opinion?

Abstract

Prior experimental research has documented a potential impact of auditor gender on audit judgement, auditor behavior and decision making. Using a unique data set of 10 286 firm-year observations of auditor gender, this study examines whether a particular characteristic of the auditor- the auditor’s gender - affects audit quality. Audit quality is measured by the propensity to issue modified opinions, first-time going-concern opinions, and going-concern opinions for financially distressed companies. The results show that the female auditors are less likely to issue modified opinions, first-time going - concern opinions, and going-concern opinions for financially distressed companies. Consistent wit prior literature, this study also confirms that modified opinions, first-time going-concern opinions, and going-concern opinions for financially distressed companies are consistently negatively associated with the size of the client firm, and positively associated with the prior year audit opinion and whether the company reported a loss. The findings provide evidence of differential audit outcomes when auditor is a female. The finding of this study has potential practical implications for accounting firms and professions in terms of assignment of personnel to audit engagements, training, decision aids, and the audit review process. The results are robust in various sensitivity analyses.