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School of Business | Department of Accounting | Accounting | 2014
Thesis number: 13911
Auditor gender and audit quality
Author: Jäntti, Matias
Title: Auditor gender and audit quality
Year: 2014  Language: eng
Department: Department of Accounting
Academic subject: Accounting
Index terms: laskentatoimi; accounting; kirjanpito; bookkeeping; tilintarkastus; auditing; tilitoimistot; firms of accountants; työ; work; sukupuoli; gender; laatu; quality
Pages: 63
Key terms: auditor gender; female auditor; gender differences; audit quality; earnings quality; earnings management

The broad aim of this study is to find out whether and how auditor gender affects audit quality. More specifically, this study examines the association between the gender of firm's audit engagement partner and the magnitude of reported accruals. As accruals are a common tool for firm managers to exercise discretion in accounting decisions, it is of importance to assess whether gender-based differences exist in the audit judgments. In addition, further tests are employed to assess whether auditor experience has influence on the auditor gender differences and whether auditor experience affects the magnitude of client firms' accruals.


The data used in the empirical part of this research is collected from several sources. Information concerning the audit engagement partners is hand-collected from the financial statements of the sample companies and the auditor authorization dates from the lists maintained by the Finnish Auditing Board. Financial data for the companies is retrieved from Orbis database. The sample consists of 2508 firm-year observations and covers a 5-year time period between the years 2008 and 2012. The sample is chosen based on the Talouselämä 500-list denoting that the firms examined in this study represent the 500 biggest corporations in Finland. The analyses of this study are conducted by means of multiple linear regressions.


The key finding of this study is that the auditor gender significantly affects audit quality. More precisely, the empirical analyses demonstrate that the client firms of female auditors report the higher magnitude of income decreasing accruals indicating that female auditors are more conservative than their male colleagues. Furthermore, the additional tests conducted in this study provide novel evidence that auditor experience is a restraining factor of earnings management. The results are both statistically and economically significant.
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