Surveys and field studies find that high-performing teams are diverse teams. Diverse teams value different perspectives and encourage the participation of team members through psychological safety, leading to higher team performance. This paper argues that team diversity is an office-level characteristic that is distinguishable from other characteristics studied in the prior auditing literature and that has an incremental effect on audit quality. I find a positive association between team diversity and audit quality that is robust to controlling for other audit office and client characteristics. Further, this positive association is stronger for more complex and non-routine audit engagements. These findings should be of interest to regulators who regulate how the auditing industry attracts and retains talent worldwide. In addition, these findings should be informative to audit committees who make auditor selection decisions and to investors and accounting researchers interested in the relation between audit team personnel and audit quality.
JEL Classifications: M41; M42.