Audit partner ethnicity and salient audit phenomena

Krishnan, Gopal V.; Singer, Zvi; Zhang, Jing

doi:10.1016/j.aos.2023.101440

Cited by 8 publications

(3 citation statements)

References 92 publications

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“…International studies indicate that female and non‐Caucasian audit partners' clients tend to be associated with higher‐quality audit outcomes (Cameran et al, 2018; Ittonen et al, 2013; Krishnan et al, 2023; Li et al, 2017). Although the evidence is much weaker or not observed in the US setting (Burke et al, 2019; Lee et al, 2019), we examine whether the office‐level diversity measures are incremental to engagement partner characteristics.…”

Section: Additional Analysesmentioning

confidence: 99%

“…In untabulated analysis, we follow a traditional four-step regression approach proposed by Baron and Kenny (1986) and find evidence of partial mediation through retention and variety in audit office personnel gender and ethnicity. Krishnan et al, 2023;Li et al, 2017). Although the evidence is much weaker or not observed in the US setting (Burke et al, 2019;Lee et al, 2019), we examine whether the office-level diversity measures are incremental to engagement partner characteristics.…”

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confidence: 93%

“…Furthermore, our findings provide important contributions to prior research. Although a significant body of research focuses on the benefits and consequences of diverse working groups (Anderson et al, 2011;Bernile et al, 2018;Cameran et al, 2018;Pelled et al, 1999), our study contributes to the auditing literature studying diversity at the individual auditor or engagement team levels (Burke et al, 2019;Cameran et al, 2018;Hardies et al, 2015;Ittonen et al, 2013;Krishnan et al, 2023;Lee et al, 2019) by focusing on the implications of gender and ethnic diversity among office audit partners to office-level outcomes.…”

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confidence: 99%

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Does gender and ethnic diversity among audit partners influence office‐level audit personnel retention and audit quality?

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Contemporary Accting Res

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Motivated by prior literature on organizational identification and 23 semistructured interviews with a variety of US audit partners and directors, we examine whether the gender and ethnic diversity of an office's audit partners influences the retention of the office's audit professionals and the quality of the audits conducted by the office. Using hand‐collected data on US audit partners, we find that greater levels of (or changes in) diversity in office audit partners' gender and ethnicity are associated with lower (reduced) turnover among office audit professionals and higher (increased) office‐level audit quality. We conduct a path analysis based on the most common mechanisms highlighted in our interviews to provide further insight into the audit quality results. The results indicate partial mediation through increased retention, greater gender and ethnic diversity among office audit personnel, client continuity, and increased efficiency. Further tests reveal that the association with audit quality is incremental to, and distinct from, the effect of individual engagement partner characteristics and does not reflect client screening. The findings underscore the importance of gender and ethnic diversity among office audit partners to organizational outcomes and provide important practical implications for audit firms.

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