The Research On Industry Specialization Of Accounting Firms

Generally speaking, people think that accounting firms, which choose the developing strategy of internationalization and scale, have strong competence in the audit market and their audit quality deserves relying. But recently emerging audit failure cases trigger our introspection about audit quality. In fact, accounting firms will obtain industry expertise if they choose the developing strategy of industry specialization, which is an additional strategy of internationalization and scale. And industry expertise, as an important component part of professional technical capabilities, also has a great influence on audit quality. So, it has significant theoretical and realistic meanings to find the way to improve audit quality and strengthen accounting firms' competence from another view through the research on industry specialization of accounting firms.Firstly, on the basis of audit target specialization and auditor's industry expertise, this paper defines the implication of accounting firms' industry specialization, and analyzes the theory basis of specialization. Then it analyzes the reason of industry specialization from audit clients, society and economy development and the adjustment about developing strategy of accounting firms, and states that not only clients, society and economy development needs industry specialization, but it is also for the accounting firms. Secondly, this paper proposes the method and criterion about the judgment of audit target specialization, auditor's industry expertise and accounting firms' industry specialization respectively. Thirdly, with recalling the locus of industry specialization in the foreign large accounting firms' merger, this paper states that the concepts of encouraging industry specialization is one of the reasons for the foreign large accounting firms' merger, and the accounting firms' industry specialization has received large development in foreign countries. Lastly, this paper examines the performance of accounting firms' industry specialization in China. That means using our criterion, this paper tests empirically the influences of our country's accounting firms' industry specialization on list companies' earnings management, and draws the conclusion that accounting firms' industry specialization doesn't restrain earnings management of list companies in our country. In addition, on the basis of the reason for our conclusion, this paper puts forward some principles and suggestions to promote accounting firms' industry specialization in China.