Do auditor and CFO gender matter to earnings quality? Evidence from Sweden

Abstract

PurposeThis study aims to examine the association between auditor and chief financial officer (CFO) gender and earnings quality, utilising data from Sweden. This study also aims to examine whether interactions between auditor and CFO, which may affect a firm’s earnings quality, are associated with their gender. These aims are inspired by the notion that gender differences will be overruled by the rewards and socialisation into the occupational roles as suggested by the structural approach to gender. Design/methodology/approachThis study uses a multivariate regression model to test its hypotheses. The sample consists of 976 firm-year observations covering the period 2008 to 2013. FindingsThe results show that gender of the auditor and CFO is not associated with earnings quality, and the interactions between auditors and CFOs, which may affect earnings quality, are not associated with their gender. Consequently, the results give tentative support for the structural approach in gender studies in the accounting and auditing field. Research limitations/implicationsThis study indicates that future research in gender studies should consider the structural approach based on the argument of gender similarities. This approach contends that work-related behaviour of women will more resemble men, and this is caused by the socialisation process into the occupational role and the structure where they work (e.g. organisational and professional culture, work conditions, a compensation scheme, national culture, etc.) instead of gender. Originality/valueThis study contributes to the understanding whether gender – auditor and CFO gender – is associated with firms’ earnings quality and standing whether the interactions between auditor and CFO are associated with their gender, something that, to the best of the authors’ knowledge, has not been tested previously. It also re-introduces the structural approach within the gender research in the accounting and auditing field.

Female Audit Partners and Extended Audit Reporting: UK Evidence

“…It does similar for calls regarding audit-related readability studies (Fisher et al 2016), as it provides initial research on the relationship gender has with linguistic style, readability, and tone of audit reports. Finally, this research explores current professional, academic, and political contentions regarding women's underrepresentation in organizations' senior management positions, especially in audit firms that face allegations of gender discrimination (Lennox and Wu 2018;Nasution and Jonnergård 2017;Dalton et al 2014). It contributes to continuing drives for minimizing gender inequality regarding representation but also such inequality at more personal levels (e.g.…”

“…Some studies link the effect of auditor gender on audit outcomes to gender discrimination in audit firms Lennox and Wu 2018;Dalton et al 2014). Female auditors must have higher skills and conduct extra effort to reach leading positions (Nasution and Jonnergård 2017). Female auditors tend to overestimate their responsibilities and take decisions that may affect their tasks' scope and performance (Fondas and Sassalos 2000;Ittonen et al 2013), which often means they work very hard and assign more resources to audit tasks.…”

The Effect of Audit Committee Characteristics on Audit Quality: The Moderating Role of Internal Audit Function

“…A reduction in financial restatements is strongly associated with the independent and financial expert of female members in the AC and the likelihood of hiring higher quality auditors can be increased when there is a presence of female members in the AC (Oradi & Izadi, 2019). However, from one of the study in Sweden showed that the gender of auditor and Chief Financial Officer has no association with earnings quality but interactions between the them will affect earnings quality (Nasution & Jonnergård, 2017). According to Ammer and Ahmad-Zaluki (2017), AC gender has insignificantly positive relationship with absolute forecast error.…”

The Effect of CFO Demographics on Fraudulent Financial Reporting

“…That is because they have higher ethical standards. They focus on financial security and their careers to avoid risky decisions (Nasution and Jonnergård, 2017;Rashad, 2014;Yuehua et al, 2018) which can threaten their reputation and will also be more ethical (Huang et al, 2012;Sundaram and Yermack, 2007). Conservative and moral characteristics and risk aversion are also shared by female CFOs who are more traditional, ethical, and risk-averse than men (Sun et al, 2017).…”