Board Diversity and the Demand for Higher Audit Effort
- 1 February 2008
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
We examine whether female corporate board membership affects the board's demand for audit effort measured by audit fees. After correcting for selectivity bias and controlling for other known board, firm and industry characteristics, we find significantly higher audit fees in firms that have at least one female director and in firms with a higher proportion of female directors on the board. The effect is also significant for female non-executive director presence and their proportion. Our findings suggest that boards with female directors are more likely to demand higher monitoring in the form of more audit effort, ceteris paribus. Exploratory analysis of the differential effect of female board membership suggests that such boards demand incremental audit effort in situations of high information asymmetry, complexity and ethical dilemma.This publication has 37 references indexed in Scilit:
- Women on Corporate Boards of Directors: International Issues and OpportunitiesPublished by Edward Elgar Publishing ,2008
- Loss Averse BehaviorJournal of Risk and Uncertainty, 2005
- The Association between Outside Directors, Institutional Investors and the Properties of Management Earnings ForecastsJournal of Accounting Research, 2005
- Earnings Manipulation Risk, Corporate Governance Risk, and Auditors' Planning and Pricing DecisionsThe Accounting Review, 2004
- Do Nonaudit Services Compromise Auditor Independence? Further EvidenceThe Accounting Review, 2003
- Boys will be Boys: Gender, Overconfidence, and Common Stock InvestmentThe Quarterly Journal of Economics, 2001
- Building the Business Case for Women Corporate DirectorsPublished by Springer Science and Business Media LLC ,2000
- An Examination of Moral Development within Public Accounting by Gender, Staff Level, and Firm*Contemporary Accounting Research, 1997
- An Empirical Analysis of the Relation between the Board of Director Composition and Financial Statement FraudCFA Digest, 1997
- Activities of Cultural OrganizationsThe Americas, 1966