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    Female Auditors and Accruals Quality
    research summary posted February 24, 2015 by Jennifer M Mueller-Phillips, tagged 05.0 Audit Team Composition, 05.10 Impact of Diversity - e.g., gender - on Group Decision Making, 11.0 Audit Quality and Quality Control, 11.07 Attempts to Measure Audit Quality 
    Female Auditors and Accruals Quality
    Practical Implications:

    The findings imply that female auditors may have a constraining effect on earnings management and thus provide higher audit quality. In general, our findings indicate that the behavioral differences between women and men may have important implications for the quality of auditing and financial reporting.

    For more information on this study, please contact Kim Ittonen.


    Ittonen, K., E. Vähämaa, and S. Vähämaa. 2013. Female Auditors and Accruals Quality. Accounting Horizons 27 (2): 205–228.

    Auditor gender, female auditors, gender differences, discretionary accruals, abnormal accruals, accruals quality, earnings management.
    Purpose of the Study:

    This paper examines the association between accruals quality and the gender of the firm’s audit engagement partner. Specifically, we aim to assess whether and how female auditors affect the quality of financial reporting. The motivation for this analysis is based upon the behavioral differences between women and men that have been extensively documented in the psychology and behavioral economics literature. In particular, we presume that gender-based differences in cognitive information processing, diligence, conservatism, overconfidence, and risk tolerance may have important implications for the audit process and auditor judgments and, thus, ultimately, for the quality of audited financial information.

    Design/Method/ Approach:

    Data and method used in the analysis:

    • Finnish and Swedish NASDAQ OMX-listed non-financial firms, covering the years 2005-2007.
    • We identify the gender of the engagement partner from the signature on the audit report, and  use abnormal accruals as a measure of the earnings quality and audit quality

    The results suggest that

    • firms with female audit engagement partners are associated with higher earnings quality
    • firms that change the engagement partner from male to female have significantly higher earnings quality in the subsequent year.
    Audit Quality & Quality Control, Audit Team Composition
    Attempts to Measure Audit Quality, Impact of Diversity (e.g. gender) on Group Decision Making