Audit Partner Gender, Leadership and Ethics: The Case of Earnings Management

Mehdi Nekhili, Fahim Javed and Haithem Nagati
Additional contact information
Haithem Nagati: EM - EMLyon Business School

Post-Print from HAL

Abstract: Our study examines whether gender-diverse engagement partners constrain unethical earnings management behavior in a French mandatory joint audit setting. The investigation of the joint audit setting, by raising concerns about audit team organization and management, provides new insights into how gender-diverse audit partners contribute to the effectiveness of audit decision-making, resulting in reduced earnings management. The need for effective collaboration and communication between joint auditors may foster a transformational leadership style on the part of audit engagement partners. In this regard, we argue that better interaction between male and female lead audit partners confers a comparative advantage on gender-diverse audit partners compared to all-male audit partners. In line with our expectation, our empirical results show that gender-diverse audit partners are negatively associated with discretionary accruals of client firms. Gender-diverse audit partners are also found to constrain earnings management irrespective of whether clients hire one or two brand-name audit firms. Finally, we find that the pervasiveness of earnings management declines when client firms switch from all-male audit partners to gender-diverse audit partners. Our findings underline the importance of considering audit partner gender by policy makers in contexts where joint audits are required or in countries that are considering introducing joint audits.

Keywords: Audit partner gender; Leadership style; Ethics; Discretionary accruals; Joint audit (search for similar items in EconPapers)
Date: 2022-05-01
References: Add references at CitEc
Citations:

Published in Journal of Business Ethics, 2022, 177 (2), 233-260 p

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04325529

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().