The Impact of CEO and Directors' Gender and Ethnicity on Audit Fees and Audit Delay

• In Event: Auditing/Government & Nonprofit

Abstract

This study examines the impact of gender and ethnic diversity in corporate leadership and boardrooms on firms’ audit fee and audit delay. We find that firms with female CEOs and greater proportion of female directors have significantly higher audit fees than those with male Caucasian CEOs and directors. We also find that firms with ethnic minority CEOs, especially Black and Hispanic CEOs, and ethnic minority directors pay significantly higher audit fee than firms with Caucasian male CEOs and directors. However, we do not find a significant association between ethnic minority CEOs and directors and audit delay. Our findings are consistent with existing theories suggesting that female and ethnic minority CEOs and directors tend to conduct more intensive monitoring, have higher risk aversion, and are less overconfident than male Caucasian CEOs and directors.

Authors

• Maretno Agus Harjoto, Pepperdine University

• Indrarini Laksmana, Kent State University

• Robert H. Lee, Pepperdine University