Further evidence on non-audit fees: Using the context of female directors on audit committees

This study aims to examine the association between non-audit fees and audit quality by utilizing the context of gender-diverse audit committees. Further, we assess whether this link is moderated by industry-specialist auditors. This study utilized non-financial FTSE-350 firms over the period of seven years. In addition, we use ordinary least squares regression to test our research hypotheses. We find that female directors on audit committees are negatively related with non-audit fees, suggesting that non-audit fees reduce audit quality. Moreover, our results indicate that industry-specialist auditors positively moderate the link between gender-diverse audit committees and non-audit fees. This suggests that non-audit fees improve audit quality when the auditor is an industry-specialist. Our study does not support blanket restrictions on non-audit fees. It recommends regulators to consider industry expertise of auditors when devising non-audit fee restrictions. Moreover, our findings have implications for firms aiming to understand whether non-audit fees could be used for enhancing audit quality. By utilizing the context of female directors on audit committees, we conclusively assess the link between non-audit fees and audit quality. Further, this study provides a more robust evidence on whether industry-specialist auditors affect the relation between non-audit fees and audit qualit