Does Female Representation on Audit Committees Affect Audit Fees?

This paper examines the association between female audit committee representation and audit fees. We hypothesize that gender diversity on audit committees has implications for external auditing, and thus affects audit fees. Using a sample of the Samp;P 500 firms, we find considerable evidence to suggest that firms with female audit committee chairs have significantly lower audit fees. From the audit demand perspective, our findings may indicate that female audit committee chairs reduce the need for assurance provided by external auditors. Alternatively, from the supply-side perspective, female chairs and committee members may decrease audit fees by affecting the auditor's assessment of audit risk, for instance, by improving the effectiveness of internal control activities or by generally enhancing the integrity of the financial reporting process. If female representation reduces the inherent risk of misstatements, gender diversity on audit committees may be negatively associated with audit fees