The Impact of Board Gender Diversity on Audit Pricing: The Case of Greek Local Governments

We study the effect of gender diversity on public‐sector auditing by analyzing the impact of female representation on audit pricing in Greek local government (LG) boards. Adopting a theoretically pluralistic approach, we find that increased female representation lowers the price of audits. This is primarily due to a perceived reduction in audit risk. This negative effect is more pronounced when the power of political opposition is weak, and the number of females on the board reaches a critical mass of 30%. Our results are robust to model specifications and endogeneity. We conclude that audit pricing, as an agency cost, is reduced because female LG representation decreases the need to bear the costs of monitoring agents.