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Female CEO succession and audit fees: evidence from China

Author

Listed:
  • Ammar Ali Gull
  • Muhammad Atif
  • Ayman Issa
  • Muhammad Usman
  • Muhammad Abubakkar Siddique

Abstract

Purpose - This paper aims to examine whether CEO succession with gender change (male to female) affects audit fees in the Chinese setting. In addition, this study examines whether the relationship exists in both types of ownership, i.e. non-state-owned enterprises (SOEs) and SOEs. Design/methodology/approach - This study uses data from all A-share non-financial firms listed on both the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) for the period 2009 to 2015. To draw inferences, this study uses pooled ordinary least squares regression as a baseline technique. This study performs sub-sample analyzes for robustness. To account for endogeneity, this study uses three techniques including firm fixed-effects regression, the two-step Heckman model and the system generalized method of moments (GMM). Findings - This study documents a significantly negative relationship between CEO succession with gender change and audit fees. However, the negative effect of CEO succession on audit fees is more pronounced in non-SOEs than SOEs. This study also finds, in additional analyzes, a strong negative effect of female CEO succession on audit fees in sub-sample of large, high-risk, high-performance and firms audited by non-big auditors. The main finding is robust across three endogeneity techniques. Practical implications - The findings add to the ongoing debate about the underrepresentation of women in key executive positions such as CEO. The results suggest that CEO succession from male to female has a favorable effect on the quality of internal monitoring mechanisms (due to the superior monitoring skills of women) and enhances the quality of financial reporting. The study has practical implications for regulatory bodies and corporate decision-makers; this study encourages them to look into considering women in the executive succession framework. Originality/value - This study contributes to the literature by exploring the effect of CEO succession with gender change (male to female) on audit fees in the context of China and the existence of this relationship in non-SOEs and SOEs.

Suggested Citation

  • Ammar Ali Gull & Muhammad Atif & Ayman Issa & Muhammad Usman & Muhammad Abubakkar Siddique, 2021. "Female CEO succession and audit fees: evidence from China," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 36(3), pages 485-509, June.
    • Handle: RePEc:eme:majpps:maj-09-2020-2824
    DOI: 10.1108/MAJ-09-2020-2824
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    Citations

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    Cited by:

    1. Javed, Muzhar & Wang, Fangjun & Usman, Muhammad & Ali Gull, Ammar & Uz Zaman, Qamar, 2023. "Female CEOs and green innovation," Journal of Business Research, Elsevier, vol. 157(C).
    2. Gull, Ammar Ali & Atif, Muhammad & Hussain, Nazim, 2023. "Board gender composition and waste management: Cross-country evidence," The British Accounting Review, Elsevier, vol. 55(1).
    3. Farooq, Muhammad Umar & Su, Kun & Boubaker, Sabri & Ali Gull, Ammar, 2022. "Does gender promote ethical and risk-averse behavior among CEOs? An illustration through related-party transactions," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Zhong, Xi & Ren, Ge, 2023. "Independent and joint effects of CSR and CSI on the effectiveness of digital transformation for transition economy firms," Journal of Business Research, Elsevier, vol. 156(C).

    More about this item

    Keywords

    Corporate governance; CEO succession; Audit fees; G30; G34; J16;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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