Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1006684 | Research in Accounting Regulation | 2011 | 16 Pages |
Audit firms vary with respect to the quality of services they provide to their clients. One differentiation strategy is related to providing services to clients that are based on in-depth industry knowledge. Industry specialization helps audit firms increase the demand for audit and non-audit services, improves audit efficiency through economies of scale, creates barriers to entry by requiring new entrants to invest significant resources in relevant industries, and affects client-relevant audit outcomes like audit fees and financial reporting quality. This review attempts to evaluate critically the archival research on the effect of audit firm industry specialization on client-relevant audit outcomes. Some suggestions for future research are offered.