Study On Effect Of Industry Specialization In TJ Accounting Firm

In 1990s,the“Big Six”accounting firms have begun to claim their industry advantages and implement industry specialization to form their unique competitive advantages.After three large-scale mergers,accounting firms in China began to recognize the important of industry specialization,and implement this strategy.?Chinese CPA Auditing Standards?,which was issued on November 1^st in 2010,proposed that CPA needed to use risk-oriented model in the audit.This requests that CPA need to know industry situation of clients when they perform audit service.Otherwise,accounting firms becoming larger and stronger request that they implement industry specialization in other point of views,and then form their own competitive advantages by this strategy.Nowadays,in Chinese auditing market,how is the effect of industry specialization?How does industry specialization affect audit quality and audit fee?Theses questions are be answered by theory and practice.This paper selects TJ accounting firm as case analysis object.Based on review of the literature,this paper uses the clients of TJ accounting firm from 2009-2017 as sample,and research the effect of implement of industry specialization.This paper uses industry share method to measure the degree of industry specialization of TJ accounting firm;uses discretionary accruals to measure the quality of audit;uses the natural logarithm of audit expenses in China to measure audit fee.After studying that how does industry specialization of TJ accounting firm affect audit quality and audit fee in general,this paper does the further study for three subdivision samples,client size,client location and client risk.The study finds that industry specialization played a positive role in general.It can improve the audit quality of TJ accounting firm and help it to obtain higher audit fees.However,in the subdivision samples,there are different effects.In the sample of client size,industry specialization can improve quality of audit for both large and small clients,but in the audit fee aspect,industry specialization just have positive effect in large client sample.In the sample of client location,industry specialization can improve quality of audit for both local clients and nonlocal clients,but only in the sample of nonlocal clients can industry specialization improve audit fees.In the sample of client risk,industry specialization can improve audit quality and audit fee for both low-risk clients and high-risk clients.Although this paper researches for TJ accounting firm,the conclusion can provide reference to the effect of implement industry specialization in native accounting firms.Accounting firms should implement industry specialization combined with its own business characteristics and Chinese unique audit market characteristics properly to enhance their competitiveness and make larger and stronger.At the same time,the conclusion of the study also provides some enlightenment for the future development direction of Chinese CPA industry along the path of industry specialization.