Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7415539 | The International Journal of Accounting | 2016 | 23 Pages |
Abstract
This study examines the relation between client business strategy and the audit quality of industry specialists. Using a sample of Chinese listed firms for the period 2000 to 2010, this study finds that the negative association between industry specialists and client discretionary accruals is more pronounced when the client's business strategy deviates from the industry-normal strategies. Our results remain valid after controlling for self-selection bias and are robust to alternative measures of discretionary accruals, auditor industry specialization, and strategic deviance. Overall, our findings suggest that the effect of auditor industry specialization is not homogeneous across clients, and client characteristics (e.g., client strategy) moderate the relation between auditor industry expertise and audit quality. This study increases the understanding of the interaction between client business strategy and audit quality.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Rongli Yuan, Yingli Cheng, Kangtao Ye,