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Contemporary Accounting Research Vol. 40 No. 4 2023

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

Eric Condie1; Ling Lei Lisic2; Timothy A. Seidel3; J. Mike Truelson4; Aleksandra B. Zimmerman5

1 Department of Accounting, Scheller College of Business Georgia Institute of Technology (Georgia Tech) Atlanta Georgia USA · 2 Department of Accounting and Information Systems, Pamplin College of Business Virginia Polytechnic Institute and State University (Virginia Tech) Blacksburg Virginia USA · 3 School of Accountancy, BYU Marriott School of Business Brigham Young University Provo Utah USA · 4 Richard C. Adkerson School of Accountancy, College of Business Mississippi State University Starkville Mississippi USA · 5 Department of Accounting, College of Business Florida State University Tallahassee Florida USA

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Abstract

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.

DOI
10.1111/1911-3846.12882
Volume
40
Issue
4
Pages
2477-2511
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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