The Auditor Industry Specialization And Its Effects On Audit Quality

Usually, audit quality depends on two aspects, one is the auditor independence relative to the customer, the other is the auditor's occupation competence and the accounting firm invests in manpower, material resources and etc. With our country's audit market standardization increased, the competition between accounting firms become fierce. In order to obtain and maintain advantage in competition, accounting firms seek method to distinguish themselves from other competitors. Audit quality as the fundament for the accounting firm to win market share, has attracted more attention. Accounting firms are seeking their suitable fraction market, and invest more manpower, material resources to cultivate more than the average level of expertise. By providing different audit services, improve accounting firms and auditors personal occupation ability, in order to realize the retaining existing customers, at the same time, to attract more customers. Our country's strategy of making accounting firms to be stronger, the domestic firms invest more resources in some industries.The present research related to audit industry specialization has increased greatly, respectively, from the audit industry specialization measurement, audit industry specialization and auditor's behavior, the audit industry specialization and audit performance and other aspects. This paper argues the research about the audit industry specialization should be systematically from theoretical analysis, the measure of industry expertise, present situation of the industry expertise development, and relation between industry expertise and audit performance. Without the analysis of our country's audit industry specialization situation, separately analysis the audit industry specialization and audit performance will make the results appear abrupt. Therefore, this paper probes the audit industry specialization and audit quality relative theory, which lays the theoretical foundation for the follow-up research; then after descriptive analysis, make sure audit market expertise has development industry expertise in China, and then carry out a detailed empirical analysis about audit industry specialization and audit quality relationship. In the analysis about audit industry specialization and audit quality relation, this paper attempts to distinguish the audit industry specialization into firm industry specialization and auditor industry expertise two aspects of the relationship between audit quality. At the same time, this paper separates the research samples into all A shares of the company, the international "big 4" accounting firms'client, the "big 10" accounting firms'clients, domestic small accounting firms'clients.The results show, based on the 2006-2010 A stock markets in China sample companies related analysis, found the audit market in China has reached a higher degree of concentration, show a moderate oligopolistic market characteristics. In market competition, the competition is not fierce, but the competition between the big accounting firms is strong. Our country industry market concentration degree's development situation and the audit market concentration development situation is similar, the concentration degree is increased year by year, already had development industry expertise. Take the whole market as the research sample, auditor industry specialization and the audit quality has positively relation, and auditor industry specialization and audit quality there has no relation. The international "big four", the "big ten" accounting firms, in the office level and individual level, industry expertise and audit quality has positively relation. But the domestic small accounting firms in two levels have no relation with the audit quality.The full text divides into 6 chapters:The first chapter is introduction. This chapter mainly introduces the research motive and significance, research status, research framework and research methods.The second chapter is basic theory and institutional background. This chapter analysis the meaning of audit industry specialization, the motivation and the institutional background of development industry expertise, the meaning of audit quality, and related theories; analysis the audit industry specialization and audit quality relation, which lay the foundation for the later empirical study.The third chapter is the audit industry specialization measurement and audit quality metrics. This chapter systematically collect the current audit industry specialization, audit quality metrics, and analysis the advantages and disadvantages of each indicators of industry expertise, the substitute index selection to lay the foundation.The fourth chapter is the analysis of our country industry expertise present situation. This chapter analysis our audit market structure, our country market structure belong to moderate oligopolistic market. The results show that, our country has the market structure to develop industry expertise in, laid a basis for empirical research.The fifth chapter is the empirical research of the audit industry specialization and audit quality. This chapter divided audit industry specialization into the accounting firm industry specialization and auditor industry expertise two aspects. Studied the relation between the industry expertise and audit quality. At the same time, studied how the accounting firm scale impacted the relation between audit industry specialization and audit quality.The sixth chapter is the conclusion. This chapter summarizes this paper's basic conclusion; put forward some suggestions to improve the audit specialization, the innovation point of this paper, the limitations of this study and further research directions.