Why do female lead auditors charge a fee premium? Evidence from the UK audit market

Journal article


Owusu, A., O'Sullivan, N., Kwabi, F. and Holmes, M. 2024. Why do female lead auditors charge a fee premium? Evidence from the UK audit market. Journal of International Accounting, Auditing and Taxation. 57, pp. 1-14. https://doi.org/10.1016/j.intaccaudtax.2024.100650
AuthorsOwusu, A., O'Sullivan, N., Kwabi, F. and Holmes, M.
Abstract

Existing research documents a fee premium for audits led by female partners (Ittonen & Peni, 2012; Hardies et al., 2015; Burke et al., 2019; Lee et al., 2019; Hardies et al., 2021). We take this work forward by investigating a possible justification for the observed premium by examining how auditor gender is related to audit report lag and whether the female partner audit fee premium is driven by audit report lag. We find that United Kingdom companies audited by a female lead auditor have a significantly shorter audit report lag but pay a significantly higher audit fee. In further analysis, we find that the fee premium for female partner–led audits is higher for clients receiving a more timely audit opinion. Our findings are consistent with female lead auditors delivering more timely audits and with audit clients being prepared to pay a premium for such timeliness. Our study extends our understanding of the importance of gender in the auditing process and the value clients see in audits led by female auditors. Given the relatively low proportion of female lead auditors, our findings should also encourage audit firms to appreciate the economic value of female lead auditors and to actively facilitate their progression to senior roles.

Keywordsauditor gender; audit timeliness; audit fees
Year2024
JournalJournal of International Accounting, Auditing and Taxation
Journal citation57, pp. 1-14
PublisherElseiver
ISSN1879-1603
Digital Object Identifier (DOI)https://doi.org/10.1016/j.intaccaudtax.2024.100650
Web address (URL)https://www.sciencedirect.com/science/article/pii/S1061951824000569
Accepted author manuscript
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Open
Publisher's version
License
File Access Level
Open
Output statusPublished
Publication dates
Online11 Sep 2024
Publication process dates
Accepted10 Sep 2024
Deposited03 Oct 2024
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