Female Auditors Research Articles

The Relationship between Corporate Governance Mechanism and the Firm Value: The Case of Islamic Banks in Malaysia and Indonesia

Our study empirically examines the relationship between corporate governance mechanism and their interactions on the firm value. We concentrated on the banking industry in Indonesia and Malaysia given that majority of the literature are primarily focused on the non-financial industry due to stringent regulation on disclosure in the financial banking counterparts. We measure firm’s value using Tobin’s q, while corporate governance mechanisms comprised of independent directors, the presence of audit committee, the institutional ownership as well as the percentage of female directors on the board. Using 48 observations during the year 2016-2018, our result exhibit that there is a significant positive association between audit committee independence and firm value. Moreover, we also reported a negative link between board independent and the presence of female directors on the firm value. In respect to our interaction effects, we found that there is a complementary relationship between (i) audit committee independent and board independent and (ii) female directors and audit committee independent and firm value. Moreover, our regression also reported a significant substitutive relationship between (i) female directors and institutional ownership (ii) female directors and board independent as well as (iii) audit committee independent and institutional ownership and firm value. In contrary to the findings from the western counterpart, our result shows that the presence of female directors reduce firm value, thus suggesting that the role of female directors have been impaired due to the cultural aspect of the society.

Discussion of “The Quality of Mandatory Nonfinancial Risk Disclosures and the Moderating Effect of Audit Firm and Partner Characteristics”

The paper on mandatory nonfinancial risk disclosures and the effect of auditor characteristics examines a topical issue and finds unexpected results. It finds that there is no overall Big 4 effect, but that some of the Big 4 audit firms are associated with a higher quality of risk disclosure. Audit partners with wider experience, and female auditors, are associated with better risk disclosure. I review the paper, applying a predictive validity model. I suggest areas where research on this issue could be further developed.

Gender Diversity in Audit Partners and Audit Efforts

The research uses regression models and panel data related to audit fees, audit hours and corporate governance. The sample of listed firms yields 751 firms-years observations for the period 2010-2018. We study how gender diversity among audit partners, Chief Executive Officers, and Boards of Directors impact on audit fees and audit hours. We focus on the interaction between auditors and management. We find that female audit partners is associated with lower audit fees and audit hours. Next, we find that female audit partner significantly affects the association with the audit efforts in interaction with management, but when the audit partner is male, audit efforts are also determined by the female representation on the Board of Directors.  We contribute to literature on the effects of gender diversity in auditing and corporate governance. We also enrich the concept of audit efforts by including audit hours as well as audit fees. Finally, the research answers the call for empirical study on the effects of gender diversity in management-auditor interaction.

Extent of patients' satisfaction in the external services department of Al-Iman General Hospital: مدى رضا المرضى في قسم الخدمات الخارجية بمستشفى الإيمان العام بالرياض

The study aimed to identify the extent of patient satisfaction in the external services section of the General Eman Hospital, and the problem of the study is summarized in the following question, which is the extent of the patients ’satisfaction in the external services section of the general faith hospital from the viewpoint of auditors of the general faith hospital in Riyadh, and the study has significance as the study is a step to identify On the level of quality of medical services aimed at patient satisfaction in the External Services Department of Al-Iman General Hospital. Likewise, this study came to know the level of quality of services provided to patients in the external services department of Al-Iman General Hospital in order to put it and put officials in the picture of the matter, and the study identified hypotheses and there are no statistically significant differences at the level of significance (5 = 0.05) towards the level of patient satisfaction, and the quality Actual services in the External Services Department of Al-Iman General Hospital, depending on gender, age and educational qualification. The descriptive analytical approach was used to achieve the goals of the study, and the questionnaire was used as a tool to collect data, and the study community consisted of auditors of Al Iman General Hospital in Riyadh, and the study sample consisted of (110) male and female auditors from Al Iman Hospital, and a set of statistical methods were used to process the study data By using the SPSS program. In light of this, a number of results were reached, the most important of which are: Health care services, such as the dimensions of service quality, tangibility: (tangible physical aspects), response, safety, and sympathy for patients, to satisfy patients in the external services department of Iman Hospital, have a significant and positive impact on patient satisfaction. Likewise, the degree of satisfaction was satisfactory with regard to the dimensions of quality of service, tangibility: (tangible physical aspects), response, safety, and sympathy for patients, to satisfy patients in the external services department of Iman Hospital. In light of the results, the study recommends the following: - Doctors and nurses should pay attention to the auditors, pay attention to the problems and inquiries of patients, and urge to provide services on time without delay, to meet the requests of patients immediately. - The hospital administration should work on everything that improves the level of satisfaction of the auditors with the provision of modern devices that contribute to providing good medical services, attention to the problems and inquiries of patients, attention to the cleanliness of hospital facilities and the development of medical guidelines, and provide waiting places for auditors.

The costs and benefits of retirement policies at U.S. audit firms

The mandatory retirement age within U.S. Big 4 audit firms ranges from 55 to 62, which has attracted controversy and legal scrutiny. The potential costs of an earlier retirement age include the loss of established networks, experience, and expertise. However, studies in non-U.S. jurisdictions conclude that partners nearing retirement disengage from their work, which manifests in lower audit quality. Using intensive hand-collected data on the age of 3,148 U.S. audit partners, we provide the first evidence of the costs and benefits of mandatory retirement policies at U.S. audit firms. We find that audit quality does not vary, but that fees are significantly higher for U.S. partners approaching retirement. These findings suggest that U.S. mandatory retirement policies are forcing out experienced revenue earners that are producing audit quality equivalent to younger partners. Additional analysis reveal that partner retirements are mechanisms to promote and grow the client portfolios of younger and female audit partners, and therefore increase partner diversity. Our additional analysis of non-U.S. audit partners leading audits of U.S. listed companies shows that partners approaching retirement are associated with lower audit quality across certain measures. This suggests that the audit quality of older U.S. partners is superior to their non-U.S. counterparts.

The Gender Effects of Audit Partners on Audit Outcomes: Evidence of Rule 3211 Adoption

This paper investigates whether the impact of PCAOB Rule 3211 on the quality and cost of audit services differs between female and male audit partners. We find that the improvement of audit quality is more pronounced for female audit partners than male partners after Rule 3211 adoption. Female audit partners are also associated with higher increases in fees and report lags than male counterparts after the adoption of Rule 3211. Further, we find that the presence of female CFOs (or female audit committee members) attenuate the audit fees and report lag increases in the post-adoption periods. Overall, our findings confirm the importance of the gender effect on audit outcomes, which needs further consideration by standard setters. Our study also provides empirical evidence of the benefits of gender equality in the workplace.

Do Board Gender Quotas Benefit Minority Shareholders? An Illustration through Related‐Party Transactions

AbstractWe use a sample of French firms over the period 2001–2017 to investigate the relationship between board gender diversity and related‐party transactions (RPTs). Although some of these transactions are efficient, RPTs are usually perceived negatively by outsiders because of the existence of conflict‐of‐interest transactions deemed to be value‐destroying. Based on agency theory and managerial power theory, we argue that female directors have the ability and motivation to challenge managers’ use of RPTs. Consistently with this argument, we find that board gender diversity negatively correlates with the number of reported RPTs. This negative correlation is driven by female directors involved in the board's monitoring duties (female independent directors and members of the audit committee). However, because they are less likely to be able to challenge managers, female inside directors do not affect the occurrence of RPTs. In January 2011, the French regulator enacted a gender quota law resulting in a significant increase in female board representativeness. We find that the marginal effect after enacting the gender quota law on the number of reported RPTs is negative for the proportion of female independent directors and female audit committee members, and positive for female inside directors.

Gender Salary Gap in the Auditing Profession: Trend and Explanations

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.

Influence of auditor's gender, experience, rule observance attitudes and critical thinking disposition on materiality judgements

Recent audit reforms prescribe an all‐inclusive approach to materiality decisions including both qualitative and quantitative information. We examine the effect of gender, experience, rule observance attitudes and critical thinking disposition of auditors on their materiality judgements. Our results support the hypothesis that female auditors utilise more qualitative information in assessing materiality judgements compared with their male counterparts. Our findings also demonstrate that auditors with low rule observance attitudes, high critical thinking disposition and increased audit experience are likely to provide a more accurate materiality judgement compared with auditors with high rule observance attitudes, low critical thinking disposition and less experience. The results of the study have implications for policymakers to coordinate with educators to develop ways to reduce differences in judgements of auditors due to variances in critical thinking disposition, audit experience and rule observance attitudes through necessary training and education.

The Effects of Female Auditors on the Sensitivity of Executive Compensation to Performance

The Effects of Female Auditors on the Sensitivity of Executive Compensation to Performance

Is There a Trade-Off Between Accrual-Based and Real Earnings Management Activities in the Presence of (fe) Male Auditors?

Prior research suggests that the presence of high-quality auditors (i.e. proxied by audit firm characteristics) constrains accrual-based earnings management, but it inadvertently leads to higher real activities manipulation. We investigate whether such trade-off exists between accrual-based and real earnings management activities in the presence of female or male auditors. We use a sample of UK firms for the period 2009 to 2016 and find that firms audited by female auditors do not resort to a higher-level real activities manipulation when their ability to engage in accruals management is constrained. Overall, our results suggest that the benefits of hiring female auditors (i.e. less accrual-based earnings management) are overwhelmingly higher than the costs they might bring to the client firms (i.e. higher real activities manipulation).

Slipping on Stereotypes – Gender Effects in the Erosion of Ethical Behavior

Ethical outcomes in organizations can strongly be influenced by gender constellations and related stereotypical ascriptions in the workplace. In this paper, we investigate experimentally how people’s gender affects ethical outcomes in repeated same- or mixed-gender interactions. In our first study (N = 681), we apply a slippery slope auditing setting (Gino and Bazerman, 2009) in which an auditor takes an approval decision on the unethical behavior of an “estimator” (the audited firm) that emerges either suddenly – in an “abrupt treatment”, or gradually – in a “slip- pery slope” treatment. We find that in same-gender estimator-auditor constellations, there are no significant differences in auditors’ approvals of overestimated amounts between the abrupt and the slippery slope treatment. Strikingly, in mixed-gender constellations, we find significant opposite effects: when male estimators are audited by females, we observe a significant slippery slope effect, caused by a high approval frequency of overestimations in the slippery slope treat- ment. Contrarily, when female estimators are audited by a males, approval frequencies spike in the abrupt treatment. To better understand these findings, in a second study (N = 90), we asked participants which level of competence or honesty they ascribe to male and female esti- mators in the estimation task. Responses indicate that the detected slippery slope effect when male estimators are audited by females may be driven by female auditors ascribing more com- petence to male estimators, what becomes particularly relevant in the slippery slope treatment where unethical behavior is difficult to perceive. Further, our finding that male auditors are especially prone to approve overestimated amounts by females in the abrupt treatment, where unethical behavior becomes salient, might root in a more ethical evaluation of female estimates. Implications for organizations are discussed.

Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality

This research investigates the relationship between the expertise of female audit committee (AC) chairs and financial reporting quality (FRQ). Also, it examines the moderating effect of the expertise of AC female chairs on the relationships between internal control (ICS), components of ICS, and FRQ This study analyses 302 firms listed on the Pakistan Stock Exchange from 2010 to 2016. Data on ICS, FRQ, and other corporate governance indications are collected manually from annual reports. This study concludes that the accounting expertise of AC female chairs enhances FRQ better than their male counterparts. Also, the accounting expertise of AC female chairs improve corporate governance mechanisms and ICSs (i.e., Control Environment, Control Activities, and information and communication). This research offers implications for shareholders and regulators. The accounting expertise of female AC chairs (WACCH) improve monitoring that enhances shareholder value and investor confidence. The regulator needs to be stricter regarding the requirements for AC chairs.

The Effect of Experience, Independence, and Gender on Auditor Professional Scepticism with Professional Ethics as Moderating

This study is aimed to analyze some factors that affect the scepticism of professional auditor. These factors are experience, independence, gender, and professional ethics. Population of this research were 347 auditors who work at the public accounting firm in Central Java and Yogyakarta. Sampling technique used convenience sampling and obtained sample of 83 auditors. For collecting data, the writer used questionnaires. The method of analyzing data was descriptive analysis and multiple regression analysis with IBM SPSS version 21 application. The statistical method used to examine the hypothesis was Moderated Regression Analysis (MRA). The results of this study indicate that the experience of auditors, gender, and professional ethics have a significant effect on auditor professional scepticism. While independence, interaction of experience and professional ethics, interaction of independence and professional ethics, as well as the interaction of gender and professional ethics have no significant effect on professional scepticism of auditors. The conclusion of this study is the need for experience, independence, and high ethical awareness for male and female auditors to remain sceptical in every audit practice.

Female Audit Partners and Extended Audit Reporting: UK Evidence

This study investigates whether audit partner gender is associated with the extent of auditor disclosure and the communication style regarding risks of material misstatements that are classified as key audit matters (KAMs). Using a sample of UK firms during the 2013–2017 period, our results suggest that female audit partners are more likely than male audit partners to disclose more KAMs with more details after controlling for both client and audit firm attributes. Furthermore, female audit partners are found to use a less optimistic tone and provide less readable audit reports, compared to their male counterparts, suggesting that behavioural variances between female and male audit partners may have significant implications on their writing style. Therefore, this study offers new insights on the role of audit partner gender in extended audit reporting. Our findings have important implications for audit firms, investors, policymakers and governments in relation to the development, implementation and enforcement of gender diversity.

Auditor gender and stock price crash risk: evidence from China

ABSTRACT Stock price crash risk is attributed to agency problems and information asymmetry. Auditors generally play a more important governance function in countries with weak legal institutions. Previous studies document that audit judgements and information processing differ by auditor gender, which ultimately impacts the quality of audited financial reporting and the governance role. This study examines the relationship between auditor gender and stock price crash risk, particularly whether female auditors may reduce stock price crash risk because of their risk aversion and ethics. Using a large sample in China with weak legal institutions, this study finds that female auditors play a governance role in curbing stock price crash risk, and the effect is dominant in the firms with high agency costs. Also, these findings are robust to a battery of tests. Finally, this study conducts two sets of cross-sectional analyses, indicating that the effect of auditor gender mostly concentrates on non-state-owned enterprises with high agency costs, and on firms with non-busy auditors that are deemed to have sufficient time to properly engage their audits. This study extends the literature on determinants of crash risk and has implications for firms, stakeholders and monitors over reducing crash risk to keep sustainable growth.

Individual auditor characteristics and audit quality: evidence from nonprofits in the US

PurposeUsing a sample of US nonprofit organizations, where the identity of the auditor in charge of the audit is revealed, I investigate whether individual auditor characteristics (gender, engagement size and tenure) are associated with audit quality.Design/methodology/approachTo investigate how individual audit partner characteristics affect audit quality, I follow Petrovits et al. (2011) and Fitzgerald et al. (2018) who investigate client characteristics and partner tenure as determinants of ICDs in nonprofits. I add three characteristics of the auditor in charge – gender, engagement size and tenure – to their models. In additional analyses, I use subsamples partitioned by client risk and audit firm size, and find that individual auditor characteristics generally play a more significant role in the issuance of ICDs and QAOs for riskier clients than for less risky clients.FindingsMy results show that female auditors are more likely to report internal control deficiencies and issue qualified audit opinions (QAOs) to nonprofits. I also find that auditors with more Single Audit engagements within the same year are less likely to report ICDs. In addition, auditor tenure is negatively associated with the likelihood of issuing an ICD report, suggesting that auditors become complacent as the length of the auditor–client relationship lengthens or, alternatively, that they are better able to assist their clients in correcting ICDs and in maintaining stronger internal control environments as they gain client-specific knowledge over time. Additional analysis suggests tenure and engagement load results are sensitive to the sample specification employed.Research limitations/implicationsOne caveat of this study is that self-selection bias may be present when a client chooses an audit firm, the audit firm selects a client, and the audit firm assigns a partner to the engagement. Future study with more advanced econometric models is needed to mitigate self-selection bias. Another limitation is that my sample consists of nonprofit organizations and may not be generalizable to for-profit firms. Another caveat of this study is that the tenure variable is truncated compared to prior literature (e.g. Fitzgerald et al., 2018). Also given the rarity of audit quality measures in the nonprofit setting, internal control deficiencies and qualified opinions are used as proxies for audit quality because they reflect both the quality of audit work and the quality of organizations' internal control and financial reporting. Future studies with data including additional audit quality measures could shed more light on the topic.Originality/valueThis study contributes to the literature in several ways. First, this study offers a more comprehensive examination on the impact that a broader set of individual auditor characteristics on audit quality in the nonprofit setting, compared to Fitzgerald et al.'s (2018) study. Second, the findings should be of interest to policymakers who recently mandated engagement partner disclosures from US audit firms (PCAOB, 2015b). Finally, another distinctive feature of this study is that I examine the impact of individual auditor characteristics on audit quality in a setting where Big 4 audit firms are not dominant.

Practitioner views of goodwill accounting under US GAAP

PurposeAccounting standards for goodwill may intensify the agency conflict. Since auditors evaluate intangible asset valuations, this study examines to what extent being an auditor (including Big 4 auditors) and being female as indicators of professional skepticism and conservatism predict accounting professionals' critical views of goodwill accounting under US GAAP.Design/methodology/approachStatistical analyses of a survey of accounting professionals in the Pacific Northwest region of the United States.FindingsThe respondents' views are dispersed from trust in GAAP to views reflecting management opportunism in goodwill accounting. While being an auditor (including Big 4 auditors) does not predict a critical perception, being a female auditor is correlated with critical views to some extent.Research limitations/implicationsThe survey was carried out in a limited geographical area and personal contacts were used to maximize the response rate, which may limit generalizability.Practical implicationsStandard setters can use the results to learn how practitioners perceive the current accounting standards for goodwill. The results provide users and preparers knowledge about potential pitfalls of goodwill accounting. Preparers could increase transparency to alleviate user concerns regarding managerial opportunism in goodwill accounting.Originality/valueThis paper extends the IFRS-based literature exploring practitioners' perceptions of accounting standards by focusing on goodwill accounting in the US GAAP environment. This study also contributes to the auditing literature by providing further evidence on how gender moderates an auditor's perception of accounting standards.

Female audit partners and accruals quality: evidence from Indonesia

PurposeThis study examines the association between accruals quality and gender of the firm's audit engagement partner in Indonesia. Specifically, prior studies provide evidence that gender-based difference in diligence, conservatism and risk tolerance, it is plausible that female auditors may improve audit quality. Indonesia provides a valuable research setting to investigate the issue, as it is mandatory to disclose the identity of the audit partners in the audit reports.Design/methodology/approachThis study employs multivariate regression model to test the hypothesis, which examines the association between accruals quality and audit partners gender. Using a sample of Indonesian publicly listed firms, we run a panel of regression of audit quality measure proxied by abnormal accruals on female auditor variable and firm-specific controls. To triangulate the results, we also conduct sensitivity analysis using high and low category of abnormal accruals, an alternative measure of accruals quality (i.e. Beneish's M score) and propensity score matching (PSM).FindingsWe find that firms with female audit engagement partners are not associated with smaller abnormal accruals, thereby implying that female auditors may not constrain effects on earnings management. In other words, gender is not an important predictor for audit quality in Indonesia.Research limitations/implicationsWe are not able to use broader measures of audit quality such as GAAP violations/restatement, litigation or audit fee. This is because the Indonesian setting somewhat limits us to collect them due to lack of regulatory actions and/or database availability.Practical implicationsThis study will contribute to the regulators (such as Financial Service Authorities/OJK) and professionals, on the effectiveness of female audit partners in improving audit quality. The study can be used as an evidence to support the gender equality in the accounting and audit industry.Social implicationsOur findings suggest that auditor gender does not lead to the improvement of accruals quality in Indonesia. Given the fact that only 14% of firms in our sample audited by female audit partners, it is plausible that the positive traits of female top managers may not transmit to the overall audit process. As such, it is important to encourage more female involvement in top position of auditing and accounting industry is required to advance the profession and its positive impact to the society.Originality/valueThere are no prior studies in Indonesia examining the effect of audit partner gender on accruals quality using archival data. As such, this research will be the first to document such evidence and therefore can improve our understanding on the role of auditor characteristic on audit quality. We also respond to the call from DeFond and Zhang (2014) to push analysis of audit quality to the individual auditor level by examining the gender of audit partner.

The Costs and Benefits of Retirement Policies at U.S. Audit Firms

The mandatory retirement age within U.S. Big 4 audit firms ranges from 55 to 62, which has attracted controversy and legal scrutiny. The potential costs of an earlier retirement age include the loss of established networks, experience, and expertise. However, studies in non-U.S. jurisdictions conclude that partners nearing retirement disengage from their work, which manifests in lower audit quality. Using intensive hand-collected data on the age of 3,148 U.S. audit partners, we provide the first evidence of the costs and benefits of mandatory retirement policies at U.S. audit firms. We find that audit quality does not vary, but that fees are significantly higher for U.S. partners approaching retirement. These findings suggest that U.S. mandatory retirement policies are forcing out experienced revenue earners that are producing audit quality equivalent to younger partners. Additional analysis reveal that partner retirements are mechanisms to promote and grow the client portfolios of younger and female audit partners, and therefore increase partner diversity. Our additional analysis of non-U.S. audit partners leading audits of U.S. listed companies shows that partners approaching retirement are associated with lower audit quality across certain measures. This suggests that the audit quality of older U.S. partners is superior to their non-U.S. counterparts.