Auditor industry range and audit quality

• 成果类型: Article
• 署名作者: Dekeyser, Simon; He, Xianjie; Xiao, Tusheng; Zuo, Luo
• 署名单位: KU Leuven; Shanghai University of Finance & Economics; Central University of Finance & Economics; National University of Singapore; Cornell University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2023.101669
• 发表日期: 2024
• 关键词: office-level; expertise; JUDGMENT; earnings; INDEPENDENCE; RESTATEMENTS; determinants; performance; KNOWLEDGE; Managers

摘要

We develop the concept of auditor industry range as the extent to which an auditor has experiences in auditing clients from different industries, and we link this construct to auditor performance, drawing on prior research in psychology and cognitive science. We find that auditors with a wide range of industry experiences are more likely to require audit adjustments than auditors with a narrow range. We conduct an extensive set of analyses to mitigate the concern that our results are driven by endogenous matching between auditors and clients. The positive relation between auditor industry range and audit adjustments exists regardless of whether the industries covered by an auditor's portfolio exhibit strong or weak economic co-movement, and the relation is stronger for more complex clients, in more uncertain environments, and for auditors with more years of audit experience. Overall, our findings suggest that an auditor's diverse experiences in different industries can enhance audit quality.