Audit Firm Industry Specialization and Client Disclosure Quality |
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Authors: | Kimberly A Dunn Brian W Mayhew |
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Institution: | (1) School of Accountancy, Florida Atlantic University, 777 Glades Rd., Business East 142, Boca Raton, FL, 33431 |
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Abstract: | This paper provides evidence that clients select auditors as part of their overall disclosure strategy. We hypothesize that in addition to higher quality audits, industry-specialist audit firms assist clients in enhancing disclosures. We also posit that the choice of an industry-specialist auditor signals a clients intention to provide enhanced disclosures. However, we predict that industry-specialist audit firms are less important in regulated industries where enhanced disclosures add little value. Consistent with our hypotheses, we document a positive association between industry-specialist audit firms and analysts rankings of disclosure quality in unregulated industries, but no relation in regulated industries. |
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Keywords: | auditor industry specialization disclosure quality regulated industries |
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