Gender Salary Gap in the Auditing Profession: Trend and Explanations

Abstract

This paper documents the auditing profession’s gender salary gap in a setting where the overall society consists of a high degree of gender equality. Using Swedish administrative data from 2007 to 2015 for all CPAs, I find that the auditing profession’s overall gender salary gap has substantially declined: the gap in 2015 is less than half the size of the 2007 gap. More female auditors have moved up to the top earnings group during this period, demonstrating an evident lessening of the glass ceiling phenomenon. Oaxaca-Blinder analysis shows that auditor’s clientele size is the most important factor in explaining the salary gap, and the increase in female auditors’ clientele size during this period accounts for half of the decrease in the total salary gap. Further, I also find evidence that the rise of female leadership in Big Six firms is positively associated with the increase in female auditors’ clientele size. Consistent with Kunze and Miller (2017), such ‘women help women’ effect in the auditing environment is more pronounced in the middle and lower half of the firm hierarchy, suggesting that female representation at the top of the firm has spillover benefits for lower-ranked female auditors. The implications of this study may help audit firms close their gender gap and better cope with the overall auditing industry’s talent challenges.