ABSTRACT
We use large, detailed data on individual auditor employment to examine the antecedents of turnover decisions and subsequent career paths of diverse individuals in public accounting—namely women and racial/ethnic minority groups (Asian, Black, and Hispanic). Despite investments in diversity, equity, and inclusion (DEI) recruiting by firms, we observe a higher likelihood of turnover among diverse auditors. Consistent with the principle of homophily, we find that same-group representation is crucial in retaining diverse auditors. These individuals are less likely to leave when surrounded by peers and leaders of the same group and are more likely to join an organization with greater same-group representation. We also find that most individuals leave the audit profession, but those who stay longer have higher seniority later in their careers—suggesting that extended tenure could mutually benefit firms and individuals. Our findings offer valuable insight for firms seeking to promote DEI while improving retention rates.
