Two Northeastern professors were part of research examining retention in the auditing field.
Audit firms are recruiting and investing to maintain a diverse workforce, but many still see high turnover.
Northeastern University accounting professors Udi Hoitash and Jaehan Ahn were involved in a study to be published in The Accounting Review that looked at how these firms can prevent this.
“We believe it’s a very important topic,” says Hoitash, the Lilian L. and Harry A. Cowan professor of accounting at Northeastern. “Big Four audit firms have invested millions and millions of dollars to diversify the workforce and there was evidence on whether it actually worked and helped audit firms at least maintain and recruit a more diverse workforce. We identified this gap in the literature and have this very cool data that allows us to examine this question.”
The researchers say they hope firms can use this data when focusing on keeping auditors who are in the minority in their field.
“What we found is that minorities as well as women feel more comfortable or are more likely to stay within an audit office if they have more people that are similar to them,” Hoitash says. “That suggests that token hiring just a few people from certain groups will not achieve the goal of maintaining a diverse workforce.
“We also found that if people are in an office that has fewer people like them, they’re more likely to leave and … move to other auditor audit offices or industries with departments that have a greater representation of people of the same gender, race or ethnicity. The main takeaway is firms have to hire a critical mass of diverse people in order to actually maintain and encourage them to stay.”
The study used data from LinkedIn to track the career paths of women and Asian, Black and Hispanic auditors. The researchers found these individuals were more likely to stay in their organization if they were around people of the same gender and race and would often join organizations with individuals sharing these traits with them.
The researchers also found that most individuals leave auditing, but those who stay experience high seniority later in their career — which is advantageous to both employee and employer, per the paper. But if firms lose people when they are at a lower level, it’s harder to have diverse people in higher-level positions.
The study was done using archival research that looked at data from thousands of LinkedIn profiles. The researchers tracked job title, gender, race and ethnicity using this publicly available data, relying on the updates people made to their profiles.
“People in white-collar professions like auditing are pretty good at having a LinkedIn … and if they get a new position or move, they’re also pretty good at updating their LinkedIn,” Hoitash says.
To track race and gender was a bit trickier. Hoitash says the researchers looked at people’s names and the pronouns they used in their profiles. They determined race and ethnicity using names, profile pictures, census data and AI models that can classify photos.
“We did our best to make sure the classification is correct,” says Ahn, an assistant professor of accounting. “We threw away data if we suspected the person doesn’t update (their LinkedIn). For example, the typical length of an associate role is five to six years. If this person had more than seven years with an associate title, we dropped them.”