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Does Auditor Industry Specialization Improve Audit Quality? Evidence from Comparable Clients (2010)
| Citations: | 4 - 0 self |
BibTeX
@MISC{Minutti-meza10doesauditor,
author = {Miguel Minutti-meza and Stephanie Larocque and Alastair Lawrence and Yanju Liu and Matthew Lyle and Ole-kristian Hope and Yu Hou and Dushantkumar Vyas},
title = {Does Auditor Industry Specialization Improve Audit Quality? Evidence from Comparable Clients},
year = {2010}
}
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Abstract
ABSTRACT: The objective of this study is to examine the relation between auditor industry specialization and audit quality using an alternative research design to mitigate the influence of client characteristics. After matching clients of specialist and non-specialist auditors according to industry, size and performance, I find no significant differences in audit quality between these two groups of auditors. My findings are robust to using alternative matching approaches, to using various proxies for auditor industry specialization and audit quality, and to controlling for the effect of imperfectly matched characteristics. In addition, I perform two analyses that do not rely primarily on matched samples. First, in examining a sample of Arthur Andersen clients that switched auditors in 2002, I find no evidence of industry-specialization effects following the auditor change. Second, I observe that the industry-specialization effects are simulated by randomly assigning clients to auditors. Overall, these findings do not imply that industry knowledge is not important for auditors, but that the extant methodology may not fully parse out the effects of auditor industry expertise from client characteristics. * This paper is based on the first chapter of my dissertation at the University of Toronto, Rotman School of Management. I gratefully acknowledge the guidance provided by my co-chairs Gordon Richardson and Ping Zhang, as well as the other members of my dissertation committee, Jeffrey Callen and Gus De Franco. I thank Yiwei Dou,
Keyphrases
audit quality comparable client auditor industry specialization industry-specialization effect client characteristic significant difference various proxy first chapter ping zhang gu de franco alternative research design extant methodology arthur andersen client non-specialist auditor auditor change auditor industry expertise jeffrey callen rotman school co-chairs gordon richardson industry knowledge matched sample yiwei dou alternative matching approach dissertation committee
