Mette Borg Væsel - 1st year PhD presentation

Supervisors: Frank Thinggaard & Niels Skipper
Discussants: Ann-Kristina Løkke Møller & Jonas Andersen

Abstract
This presentation outlines my PhD project and its current progress, with particular focus on my first paper. I will also lay out a plan for the key elements of my PhD education, including teaching hours, ECTS credits from PhD courses, and research stay abroad.

The first paper extends previous research on the association between audit quality and gender. Many studies find that female auditors are associated with lower earnings management, and one often-cited mechanism is stronger risk aversion (see, e.g.Ittonen et al., 2013; Lee et al., 2019). Prior studies typically lack direct or reliable measures of auditors’ risk preferences. As a result, it remains unclear whether documented gender differences reflect gender per se or differences in underlying preferences that are correlated with gender. By combining multiple administrative proxies from Statistics Denmark and correcting for measurement error using the Obviously Related Instrumental Variables (ORIV) approach (Gillen et al., 2019), we aim to provide new evidence on this question.     

The study makes three main contributions. First, we contribute to the audit quality literature by providing new evidence on the role of auditors’ risk preferences as an underlying factor in audit outcomes. Second, we contribute to the literature on gender and auditing by clarifying how observed gender differences in audit quality should be interpreted. Third, and more broadly we contribute methodologically by introducing and demonstrating the use of ORIV in an archival accounting context.

The second paper builds on the focus on gender differences but adopts a more causal design. Focusing on male auditors, it exploits the exogenous shock of having a daughter and examines its effect on audit quality 

The overall contribution of the project is to advance the literature on how audit quality is shaped by the behavioral traits of the signing auditor, employing novel econometric methods and detailed, proprietary data that encompass both listed and private companies. Its broader aim is to extend the theoretical framework of Francis (2011) by testing whether unconscious biases, such as risk preferences, are associated with audit quality, an association we expect to run largely through their influence on decision-making in the auditing process.

Sources
Francis, J. R. (2011). A Framework for Understanding and Researching Audit Quality. Auditing : a journal of practice and theory, 30(2), 125–152. https://doi.org/10.2308/ajpt-50006

Gillen, B., Snowberg, E., & Yariv, L. (2019). Experimenting with Measurement Error: Techniques with Applications to the Caltech Cohort Study. The Journal of political economy, 127(4), 1826–1863. https://doi.org/10.1086/701681

Ittonen, K., Vahamaa, E., & Vahamaa, S. (2013). Female Auditors and Accruals Quality. Accounting horizons, 27(2), 205–228. https://doi.org/10.2308/acch-50400

Lee, H. S., Nagy, A. L., & Zimmerman, A. B. (2019). Audit Partner Assignments and Audit Quality in the United States. The Accounting review, 94(2), 297–323.