Study: While Women Enter Big Four in Large Numbers, Few Ever Lead Audits of Large Firms

Chris Gaetano
Published Date:
Sep 17, 2018
Pay Gap

A recent study has found that women in the Big Four rarely lead audits of large corporate entities, despite making up about 51 percent of all accounting staff throughout the industry, according to the Wall Street Journal. The study, conducted by the CFA Institute, found that when it came to audits of S&P 500 corporations, only 15 percent are led by women; when it came to audits of S&P 100 corporations, just 11 percent are led by women. This is the average among all Big Four firms. Getting specific, when looking at women-led S&P 500 audits, Deloitte's percentage is 20.8 percent; PricewaterhouseCooper's is 16.3 percent; Ernst &Young's is 12.9 percent; and KPMG is 10.6 percent. 

The study also found that engagement partners are more likely to be male the longer a firm has worked with a single company. In the 36 S&P 500 firms that have been with their auditor for 75 years or more, there were no female engagement partners at all; at the 107 that have had the same auditor for at least 40 years, there have been just six female engagement partners. This is likely a reflection of the dearth of female partners in general; despite the profession now being about 51 percent female, women make up just 24 percent of partners and principals. 

The Journal noted that the Big Four often serve as a natural pipeline to train people who later on become high-level corporate executives at public companies. Fewer women leading the complex financial audits that typically characterize large firms mean fewer getting the experience and visibility necessary to take on such industry roles in the future. However, other research indicates that this is merely one step in a long process of women not getting prime assignments in their companies, which further kneecaps their career advancement compared to men. 

One study, using Finnish metal workers as an example, found that "women are initially assigned to less complex jobs than men," which can have long-term effects, as "the effective ability of the worker is revealed after these assignments and the subsequent promotions are based on the observed effective ability." In other words, women have fewer chances to prove themselves to their employers than men, and so are less likely to be promoted. Since, in this study, women seemed to start their careers in clearly less complex jobs than men, despite no corresponding difference in productivity, the threshold for them to get promoted is higher. 

Another study, looking at 317 employees working at middle job levels in a pharmaceutical company, came to a similar conclusion. It found that, "at at middle job levels, women have fewer challenging experiences in their jobs than their male colleagues, even when the data are controlled for their ambition, core-self evaluations and relevant sociodemographic variables." The paper found that one of the underlying factors in this gender difference is that "senior managers were more inclined to assign challenging tasks to the male, as opposed to the female subordinates they supervise, even when controlled for subordinates’ sociodemographic variables, ambition and job performance, and the supervisors’ perceptions of the LMX relationship and similarity." The paper said that this may result in women having fewer promotion opportunities than men, as women are denied important developmental opportunities by their superiors. 

This phenomenon manifests itself not just in business but the military world as well. The push to allow women in front line military roles is motivated, at least in part, to remove a barrier to women's advancement in the military. These sorts of assignments are one of the ways that armed forces members can distinguish themselves and earn promotions, but if women are barred from them, then this cuts off a significant avenue for career advancement. 

Yet another study found that women take on more tasks classified as "low-promotability"—that is, jobs "that everyone prefers be completed by someone else (writing a report, serving on a committee, etc.) because people believe, quite correctly, that women are more likely to accept them. Unlike other, more challenging assignments, these tasks have been shown to have less impact on one's evaluation and career advancement, as they are rarely in areas the organization values. For instance, the paper noted that, at universities, it is generally understood that research is how academics advance their careers, yet female academics are more likely to be assigned, or asked to volunteer for, tasks that have nothing to do with research and will have no real impact on their careers. The paper said this can turn into a self-perpetuating process whereby women take on more low-promotability tasks, which makes them less productive on the tasks the organization values; this productivity difference then "may make it appear to be more efficient to allocate less-promotable tasks to the seemingly 'less-productive' women." 

The Big Four, in statements to the Journal, highlighted their efforts to improve diversity and inclusion within their leadership cadres (with the exception of KPMG, which declined to comment). PwC said that women make up 30 percent of their newest partner class, as did EY, while Deloitte stressed its programs to sponsor and mentor female leaders. 

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