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Partner-level industry specialization and earnings quality: an analysis of industry diversity in client portfolios |
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| รหัสดีโอไอ | |
| Title | Partner-level industry specialization and earnings quality: an analysis of industry diversity in client portfolios |
| Creator | Pakapong Boonyakiat |
| Contributor | Nontawan Yomchinda, Advisor |
| Publisher | Thammasat University |
| Publication Year | 2565 |
| Keyword | Industry specialization, Industry expertise, Audit partner, Audit quality, Earnings quality |
| Abstract | This study focuses on the auditor industry specialization for U.S. audit partners. I examine the relationship between such auditor industry expertise and earning quality by incorporating industry diversity in client portfolios to better understand the relevant factor that drives industry specialization development for auditors. The empirical results indicate that industry-specialist partners can constrain earnings management by reducing discretional accruals due to their industry-specific knowledge. In addition, industry diversity in client portfolios can inhibit earnings management due to knowledge leverage across client industries. However, industry diversification has the moderating effect due to its negative effect on earnings quality only for industry-specialist auditors who highly rely on audit experiences from client industries to develop their personal industry expertise. This study contributes to the auditor industry specialization literature several ways. First, the audit partner effect for industry specialization in U.S. compliments the existing at the audit office and audit firm levels. Second, such industry expertise is driven by industry diversification in client portfolios of auditors. Lastly, this study provides the practical contribution for audit partner assignment practices in audit firms by considering the characteristics of client industries in partners’ portfolios. |
