Audit Partner Gender and Financial Statement Comparability

We predict that documented gender-based behavioral differences between men and women are likely to influence an audit engagement partner’s ability to implement in-house working rules and enforce auditing standards within their clientele. If female auditors are more risk averse, averse to competition, less overconfident, and process information more comprehensively then two companies audited by two female auditors will exhibit greater financial statement comparability than any other combination of auditors. Using a sample of U.S. firms and Form AP filings from PCAOB, we find that firm-pairs in the same industry and year report more comparable financial statements when they are each audited by a female auditor than when (1) one firm is audited by a female auditor and the other by a male auditor, and (2) when firm-pairs are each audited by a male auditor. We also find that firm-pairs audited by two male auditors have the least comparable financial statements compared to other pairs of auditors. These results are not driven by observable differences in firm characteristics, auditors’ in-house working rules, mechanical bias or randomness, and within-industry pairings. Overall, we provide new evidence on gender differences in auditor style and its implications for financial statement comparability