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Auditor's Gender and Audit Fees
Author(s) -
Ittonen Kim,
Peni Emilia
Publication year - 2012
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/j.1099-1123.2011.00438.x
Subject(s) - audit , accounting , overconfidence effect , business , joint audit , audit evidence , affect (linguistics) , due diligence , audit risk , external auditor , auditor independence , inherent risk (accounting) , investment (military) , internal audit , finance , psychology , social psychology , political science , communication , politics , law
Documented behavioral differences between women and men suggest that the gender of the audit engagement partner may have implications for the price setting of the audit. Thus, this paper examines the effect of the auditor's gender on audit fees in an environment where the responsible audit partners can be identified. Using a sample of public firms from the NASDAQ OMX exchanges in three Nordic countries, we find evidence indicating that firms with female audit engagement partners have significantly higher audit fees. Although this is an interesting finding, it should be interpreted with caution since there is no clear theoretical explanation to support it. Potential reasons are introduced, such as the gender differences in risk tolerance, which may affect the pricing decisions by increasing the audit investment and/or increasing the audit fee risk premium. Alternatively, female auditors' diligence, lower overconfidence, and higher level of preparation could also lead to an increase in audit investment, and thereby result in higher audit fees.