Reducing Restatements with Increased Industry Expertise

• 成果类型: Article
• 署名作者: Chin, Chen-Lung; Chi, Hsin-Yi
• 署名单位: National Chengchi University; National Chung Hsing University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/car.26.3.4
• 发表日期: 2009
• 页码: 729-+
• 关键词: CORPORATE GOVERNANCE; auditor independence; specialization; determinants; KNOWLEDGE

摘要

This paper examines whether the likelihood of accounting restatements is associated with Big 4 industry auditor specialists, measured at both the partner level and the audit firm level. We focus on a sample of listed firms in Taiwan, where audit reports must be audited and signed by the two signing auditors as well as by an audit firm. Extending previous studies, we classify industry specialists into three groups: (a) auditors that are industry specialists at both the individual partner level (i.e., the lead signing auditors) and the firm level; (b) auditors that are industry specialists at the individual partner level but not at the firm level; and (c) auditors that are industry specialists at the firm level but not at the individual partner level. The results reveal that clients of signing auditor specialists, either alone or in conjunction with firm-level specialists, are less likely to make accounting restatements relative to those of other auditors. We find no evidence that firm-level auditor specialists alone are associated with a smaller likelihood of accounting restatements. However, a firm-level industry expert does matter where the lead auditor is an expert. The results suggest that differential likelihood of accounting restatements due to Big 4 industry expertise is primarily attributable to the signing partner specialists rather than to auditor specialists at the firm level. We also find that differential restatement likelihood due to signing auditors' expertise is driven by the lead auditor's expertise, rather than by the concurring auditor's expertise.