Gender equity in public accounting: Evidence from single audit partner and director engagement leaders

Abstract

While women are hired in equal numbers to men in public accounting, they are not proportionately promoted to partner, reflecting “vertical gender segregation.” This study examines vertical segregation in director positions which are an alternative terminal destination to the partnership. Using a U.S. non-profit setting, our results demonstrate that directors signing single audit reports are more likely to be female after controlling for client and signer characteristics, a clear pattern of gender-based vertical segregation among engagement leaders. This finding provides insights into practices which divert women to lower prestige director positions. In a supplemental test, we also find a fee premium for female partners but a fee discount for female directors, which may lead to gender-bias in compensation. These findings are particularly timely considering the disproportionate effect of the COVID-19 pandemic on women.