Female directors on audit committees and audit quality : evidence from the UK

Abbasi, K

Abstract

Evidence on the association between female directors on audit committees and audit quality is not convincing, as it fails to effectively consider the practitioners’ audit quality assessments. By utilising both the audit fees and meeting or beating the zero earnings benchmark as audit quality proxies, this study captures the practitioners’ evaluations and provides convincing evidence on the link between female directors on audit committees and audit quality.
Further, prior literature fails to consider the types of female financial experts on audit committees in the context of audit quality. It is also unclear whether Chief Financial Officer (CFO) experts on audit committees are as effective as public accounting experts in monitoring financial reports. Therefore, this thesis also investigates whether accounting, non-accounting, public accounting and CFO expertise of female audit committee members are associated with audit quality.
Using ordinary least-squares regression and the United Kingdom firms from 2009 to 2017, this study finds a positive association between female directors on audit committees and audit quality. Further, it substantiates that this association is dependent on the public accounting expertise of female audit committee members.
This study contributes to audit quality literature and to the research identifying characteristics driving female directors’ monitoring. Moreover, it contributes to the conflicting evidence related to female financial experts on audit committees and financial reporting monitoring, as the results suggest that the mixed evidence may have been driven by the researchers’ failure to segregate financial expertise. It also contributes to the debate on whether accounting or non-accounting expertise enhances financial reporting monitoring. Further, it applies the theoretical framework of combining agency theory and resource dependency theory to female directors on audit committees. Furthermore, the study supports policy-makers’ efforts towards greater presence of female directors, however, it recommends that they should also consider the public accounting expertise of female directors.

Citation

Abbasi, K. Female directors on audit committees and audit quality : evidence from the UK. (Thesis). University of Salford

• Thesis Type: Thesis
• Deposit Date: Nov 12, 2019
• Publicly Available Date: Nov 12, 2019