Gender Diversity and Audit Quality: Evidence from Audit Partner Pairing

68 Pages Posted: 25 Aug 2017 Last revised: 11 Dec 2019

See all articles by Bin Srinidhi

Bin Srinidhi

University of Texas at Arlington - Department of Accounting; City University of Hong Kong (CityUHK) - Department of Accountancy

Zhifeng Yang

Stony Brook University

Karen Yumin Zhang

Monash University - Department of Accounting

Date Written: November 01, 2019

Abstract

This study examines how audit-partner gender-diversity impacts audit quality, using data from China, where two partners are assigned to lead each engagement. Female and male partners bring different resources, in the form of information, expertise, experience, and perspectives that could result in higher professional skepticism and better audit quality. The beneficial effect of gender diversity on audit quality is likely to be stronger when the two partners have similar authority or collaborated before, resulting in effective inter-partner communication, and in complex engagements where different perspectives are more valuable. Using the propensity to issue modified audit opinions as a proxy for audit quality, we provide evidence supporting these propositions. Additional analyses show that dyads of gender-diverse partners are less likely to be sanctioned and can charge higher audit fees. These findings further support the hypothesis that partner gender diversity enhances audit quality.

Suggested Citation

Srinidhi, Bin and Yang, Zhifeng and Zhang, Karen Yumin, Gender Diversity and Audit Quality: Evidence from Audit Partner Pairing (November 01, 2019). Available at SSRN: https://ssrn.com/abstract=3025235 or http://dx.doi.org/10.2139/ssrn.3025235

Bin Srinidhi

University of Texas at Arlington - Department of Accounting ( email )

Arlington, TX 76013
United States

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

Zhifeng Yang

Stony Brook University ( email )

Health Science Center
Level 3, Room 043
Stony Brook, NY 11794-8322
United States

Karen Yumin Zhang (Contact Author)

Monash University - Department of Accounting ( email )

Building H, Level 3
Caulfield campus
Melbourne, Victoria 3800
Australia

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