The role of female representation in enhancing audit quality: Insights from Saudi Arabia’s emerging market

Abstract

This study investigates the effect of enabling Saudi women on audit quality, focusing on firms listed on the Saudi stock market. Specifically, it examines the impact of gender diversity within boards of directors and audit committees on audit quality. Using data from 126 non-financial firms during 2018–2022, the research employs a conditional logit model as the primary analytical method and the Generalized Method of Moments for robustness checks to address potential endogeneity. The findings indicate that a rise in the number of female board members correlates with enhanced audit quality, supporting the notion that gender diversity strengthens oversight and governance. Additionally, this study incorporates an alternative proxy for audit quality, auditor tenure, to ensure the robustness of the findings. The results using this alternative proxy remain consistent with the main findings, further supporting the positive relationship between gender diversity and audit quality. By situating the analysis within Saudi Arabia’s unique cultural and regulatory environment, the study advances agency theory and resource dependence theory, demonstrating how gender diversity enhances governance outcomes in emerging markets. It provides valuable insights for policymakers and business leaders, supporting Saudi Vision 2030’s goals of fostering gender equality and improving corporate governance. This study makes a significant empirical contribution to the understudied topic of women’s empowerment in the Middle East, offering actionable strategies to leverage gender diversity effectively and highlighting its nuanced impacts across governance roles.