Female audit committee directorship and audit fees

Abstract

Purpose

The purpose of this paper is to examine the association between female audit committee representation and audit fees, taking into account their demographic attributes.

Design/methodology/approach

Research hypotheses have been tested by performing both univariate and multivariate analyses based on a sample of 790 firm-year observations from Swedish listed firms, spanning the period 2013-2017.

Findings

Initial finding derived from the empirical analyses provides consistent evidence of a positive association between female audit committee representation and audit fees. Controlling for self-selection bias, this finding holds unchanged. Therefore, female directors are voluntarily appointed to the companies audit committees. Including demographic attributes of women directors sitting in audit committees in the audit fees, models show that increased audit fees is driven by the level of female directors’ professional experience rather than their mere representation. Results from supplementary analysis document that the positive relationship between female audit committee representation and audit fees is more pronounced when the partner in charge of the audit engagement is a female, indicating that women presence on both the demand and supply-side of audit pricing enhance audit quality more importantly than when women are present on only the demand-side position of audit fees.

Originality/value

This study extends beyond recently published literature on the relation between audit committee gender-diversity and audit fees by offering a novel insight on demographic attributes of female directors enabling them to demand higher quality audits, as reflected by increased audit fees.

Citation

Mnif Sellami, Y. and Cherif, I. (2020), "Female audit committee directorship and audit fees", Managerial Auditing Journal, Vol. 35 No. 3, pp. 398-428. https://doi.org/10.1108/MAJ-12-2018-2121