Does Auditor Industry Specialization Improve Audit Quality
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Does Auditor Industry Specialization Improve Audit Quality
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Author : Miguel Minutti-Meza
language : en
Publisher:
Release Date : 2013
Does Auditor Industry Specialization Improve Audit Quality written by Miguel Minutti-Meza and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This study examines whether auditor industry specialization, measured using the auditor's within-industry market share, improves audit quality and results in a fee premium. After matching clients of specialist and non-specialist auditors on a number of dimensions, as well as only on industry and size, there is no evidence of differences in commonly used audit-quality proxies between these two groups of auditors. Moreover, there is no consistent evidence of a specialist fee premium. The matched-sample results are confirmed by including client fixed effects in the main models, examining a sample of clients that switched auditors, and using an alternative proxy that aims to capture the auditor's industry knowledge. The combined evidence in this study suggests that the auditor's within-industry market share is not a reliable indicator of audit quality. Nevertheless, these findings do not imply that industry knowledge is not important for auditors, but that the methodology used in extant archival studies to examine this issue does not fully parse out the effects of auditor industry specialization from client characteristics.
Does Auditor Tenure Improve Audit Quality Moderating Effects Of Industry Specialization And Fee Dependence
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Author : Chee Yeow Lim
language : en
Publisher:
Release Date : 2015
Does Auditor Tenure Improve Audit Quality Moderating Effects Of Industry Specialization And Fee Dependence written by Chee Yeow Lim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
We investigate whether the relation between auditor tenure and audit quality is conditional on auditor specialization and fee dependence. Although prior studies have investigated the relation between extended auditor-client tenure and audit quality, none has examined how this relation is jointly influenced by both auditor specialization and fee dependence. Our main analyses, using accrual quality as a measure of audit quality, show that firms audited by specialists (vs. non-specialists) have relatively higher audit quality with extended auditor tenure, and that this relation is negatively moderated by auditors' fee dependence on clients. These results are robust to sensitivity tests, and alternative proxies for audit quality such as the issuance of going concern opinions and the market's response to quarterly earnings surprises.
Auditor Tenure Auditor Specialization And Information Asymmetry
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Author : Ali R. Almutairi
language : en
Publisher:
Release Date : 2009
Auditor Tenure Auditor Specialization And Information Asymmetry written by Ali R. Almutairi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
This paper examines the association between bid-ask spread, a market based measure of information asymmetry, and auditor industry specialization and auditor tenure. Our results show that information asymmetry is negatively related to the employment of an industry specialist auditor and positively related to audit firm tenure. These results are consistent across measures of specialization based on market share, portfolio share, and a composite measure of specialization introduced by Neal and Riley (2004). However, further tests refine those conclusions, in that the positive association between tenure and information asymmetry differs between specialist and non-specialist auditors. Specifically, we find that bid-ask spread is increasing in tenure for clients of non-specialist regardless of which measure of specialization is used, while the relation between bid-ask spread and tenure is statistically significant for clients of specialists for only one of the three specialization measures. These findings are consistent with a market that perceives audit quality diminishing with tenure for non-specialist auditors; and a market that finds audit quality increasing with industry specialization.
Audits Of Public Companies
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Author : United States. General Accounting Office
language : en
Publisher: Nova Publishers
Release Date : 2008
Audits Of Public Companies written by United States. General Accounting Office and has been published by Nova Publishers this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
This book examines (1) concentration in the market for public company audits, (2) the potential for smaller accounting firms' growth to ease market concentration, and (3) proposals that have been offered by others for easing concentration and the barriers facing smaller firms in expanding their market shares.
Audit Quality And Accrual Reliability
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Author : Dennis J. Chambers
language : en
Publisher:
Release Date : 2008
Audit Quality And Accrual Reliability written by Dennis J. Chambers and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
This study examines three research questions. First, did accrual reliability improve in the post-SOX period? Second, do companies receiving higher-quality audits report accruals that are more reliable? Third, did the degree of SOX-related improvement in accrual reliability vary across companies with disparate audit quality? We first demonstrate that accrual reliability increased significantly in the post-SOX period. We next define three metrics for audit quality: audit firm industry specialization, audit-firm independence, and client-specific audit-firm litigation/reputation risk. We find evidence that accrual reliability is positively associated with each of our audit quality metrics. Finally, we find evidence that in the post-SOX period, subsamples of companies experienced more improvement in accrual reliability than others. Specifically, companies audited by non-specialist auditors, those audited by lower-independence auditors, and those that represent higher litigation/reputation risk to their auditor experienced the greatest improvement in accrual reliability in the post-SOX period.
Auditor Specialization
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Author : Steven F. Cahan
language : en
Publisher:
Release Date : 2012
Auditor Specialization written by Steven F. Cahan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
A report issued by the U.S. General Accounting Office (GAO) in 2003 identified industry specialization as a key driver of consolidation among audit firms and highlighted the extreme levels of auditor concentration in some industries. Like the GAO, we view auditor concentration as a measure of industry specialization, and we examine one feasible explanation for why auditor specialization differs across industries. We posit that the investment opportunity set (IOS) plays an important role in determining whether an industry is an attractive target for auditor specialization and in creating barriers to auditor entry. We argue that when industry-specific IOS is high, auditors will make costly industry-specific investments that allow them to offer a differentiated product and to create entry barriers for other audit firms. However, when a large component of IOS is specific to individual firms within an industry so that IOS is highly variable within the industry, the auditors' knowledge requirements are highly specific to those firms and it is more difficult to transfer knowledge and spread costs across clients in that industry. Using two different measures of IOS and three alternative industry classification schemes, we present evidence that auditor specialization is increasing in industry IOS levels and decreasing in within-industry IOS variability.
Summary Of The Accounting Establishment
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Author : United States. Congress. Senate. Committee on Government Operations. Subcommittee on Reports, Accounting, and Management
language : en
Publisher:
Release Date : 1976
Summary Of The Accounting Establishment written by United States. Congress. Senate. Committee on Government Operations. Subcommittee on Reports, Accounting, and Management and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1976 with Accountants categories.
Auditor Specialization Auditor Dominance And Audit Fees
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Author : Steven F. Cahan
language : en
Publisher:
Release Date : 2012
Auditor Specialization Auditor Dominance And Audit Fees written by Steven F. Cahan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
A report issued by the U.S. General Accounting Office (GAO) in 2003 identified auditors' industry expertise as a critical factor for firms choosing an auditor, and highlighted the rather extreme levels of auditor concentration in some industries. We posit that the investment opportunity set (IOS) plays a fundamental role in determining whether an industry is an attractive target for auditor specialization. When industry-specific IOS is high, specialist auditors make costly investments in industry-specific knowledge, allowing them to offer a differentiated product and to create entry barriers for other audit firms. When the IOS of firms within an industry is relatively homogeneous, auditors can transfer such knowledge across clients in the industry more easily, resulting in cost savings and scale economies. However, greater homogeneity of IOS in an industry can also increase a client's aversion to sharing an auditor with its competitors because of concerns about transfers of proprietary information, suggesting that industries with relatively homogeneous IOS are less likely to be dominated by a single auditor. We show that auditor concentration in an industry relates positively to both the level and homogeneity of IOS in the industry, while auditor dominance relates negatively to industry IOS homogeneity. Further, we examine the effects of industry IOS on audit pricing.
Audit Quality
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Author : Jonas Tritschler
language : en
Publisher: Springer Science & Business Media
Release Date : 2013-10-31
Audit Quality written by Jonas Tritschler and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013-10-31 with Business & Economics categories.
Arising from the author’s experience as a practicing CPA, this book is quite different from other research in this field, as it confronts the subject of audit quality from a pragmatic perspective. The first goal of Jonas Tritschler is to develop an audit quality metric on national audit firm level. Financial reporting errors, as detected by the German enforcement institutions during examinations, which subsequently are published in the German Federal Gazette by the involved companies, are the data basis for this measurement. Using the developed audit quality metric, the second goal of this study is to analyze audit quality differences of selected audit firms by comparing their deployed audit input factors such as employee’s competence (ratio of certified professionals to total audit staff), experience of employees (average tenure of employees in years) and client-specific experience (client fluctuation rate). Results indicate a correlation between audit quality according to the developed metric and the operationalized audit input factors mentioned above.
The Future Of Auditing
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Author : David Hay
language : en
Publisher: Routledge
Release Date : 2019-06-20
The Future Of Auditing written by David Hay and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-06-20 with Business & Economics categories.
The Future of Auditing provides a concise overview of the function of auditing and the future challenges it faces, underpinned with suggestions for future research. It evaluates the key challenges facing the profession, such as quality, competition, and governance, as well as highlighting the under-explored areas of ethics, fraud, and judgement. The emphasis throughout is on the value of audit, and the importance of auditing research. Providing an original assessment of global versus national auditing, evidence-based auditing standards, and the structure of professional firms, David Hay critically examines the value of auditing from different standpoints. He critically reviews current assumptions about the value of audits of financial statements, and explores research opportunities and priorities to improve understanding of the value of auditing and its future role and function. This authoritative but accessible guide to the future of auditing and the challenges it faces will be useful not only to auditing researchers, but also to policy makers, standard setters, financial journalists, and auditing professionals seeking an accessible overview of current and future issues in auditing.