Journal article
The validity of auditor industry specialization measures
S Audousset-Coulier, A Jeny, L Jiang
Auditing | Published : 2016
DOI: 10.2308/ajpt-51176
Abstract
In this research note, we examine the validity of the measures of auditor industry specialization in empirical archival audit research. Industry specialist auditors are auditors who have developed a specific expertise and are therefore able to provide high quality and more efficient services to their clients. Over the years, research scholars have developed a multiplicity of measures of industry specialization (ISP). We compare 30 ISP measures and find that the use of different ISP proxies results in inconsistent classifications of auditors as specialists. Using audit fee and earnings quality models, we further show that these inconsistencies have a significant effect on the inferences drawn..
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Funding Acknowledgements
The authors thank Mara Cameran, Steve Fortin, Jennifer Francis, Jere Francis, Robert Knechel, Cedric Lesage, Michel Magnan, Miguel Minutti-Meza, Sophie Marmousez, Charles Piot, participants at the 2012 Concordia University (Montreal) research workshop, the 2013 HEC-ESSEC Paris Joint Research Seminar, the 2013 CIG Conference in Nantes, the 2013 EAA Conference in Paris, the 2013 AFC Conference in Montreal, and at the 2013 Bocconi University (Milan) Research Workshop for their valuable comments and suggestions. Professor Audousset-Coulier gratefully acknowledges financial support from the Concordia University John Molson School of Business seed funds. Professor Jeny acknowledges financial support from the Research Center of ESSEC Business School.