Prior research suggests that the presence of high quality auditors (i.e. proxied by audit firm characteristics) constrains accrual-based earnings management, but it inadvertently leads to higher real activities manipulation. We investigate whether such trade-off exists between accrual-based and real earnings management activities in the presence of female or male auditors. We use a sample of UK firms for the period 2009 to 2016 and find that firms audited by female auditors do not resort to a higher level real activities manipulation when their ability to engage in accruals management is constrained. Overall, our results suggest that the benefits of hiring female auditors (i.e. less accrual-based earnings management) are overwhelmingly higher than the costs they might bring to the client firms (i.e. higher real activities manipulation).
|Number of pages||22|
|Journal||Journal of Business Ethics|
|Early online date||13 Nov 2020|
|Publication status||Published - Feb 2022|
Bibliographical noteThe final publication is available at Springer via http://dx.doi.org/10.1007/s10551-020-04672-5
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FunderCoventry University (2016-2017) Pump-Prime funding award
- Abnormal accruals
- Auditor gender
- Real activities
ASJC Scopus subject areas
- Business and International Management
- Business, Management and Accounting(all)
- Arts and Humanities (miscellaneous)
- Economics and Econometrics