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The paper aims to assess whether gender-diverse audit committees (ACs) affect audit quality in gender unequal country, namely Pakistan, given that prior research is mainly concentrated on developed countries with higher gender equality and evidences that female directors on ACs are effective in terms of audit quality. Therefore, our research may identify whether the positive association between female directors on ACs and audit quality in the developed countries stems from their greater gender equality. Our study’s sample includes non-financial listed Pakistani firms from 2009 to 2015. We determine audit quality through the likelihood of choosing industry specialist auditor (ISA) and audit fees. After incorporating missing information, our firm-year observations constitute 738 (780) for the ISA (audit fee) model. Further, we employ logistic regression for ISA model due to the dichotomous nature of the variable and utilize ordinary least squares regression for audit fee model. We find that gender-diverse ACs reduce the likelihood of hiring ISA and decrease audit fees. Our findings are robust to propensity-score matched regression and fixed effects model. Our result highlights that when there is high gender inequality, it may be beneficial for policy-makers to empower women and thereby help them raise their voice.

Keywords: Audit Committees, Gender Diversity, Audit Quality, Gender Inequality, Pakistan.