Auditor Industry Specialization and Client Disclosure Quality

29 Pages Posted: 9 Mar 2000

See all articles by Kimberly Dunn

Kimberly Dunn

Florida Atlantic University - School of Accounting

Brian W. Mayhew

University of Wisconsin - Madison - Department of Accounting and Information Systems

Suzanne G. Morsfield

Columbia University - Center for Excellence in Accounting and Security Analysis

Date Written: February 18, 2000

Abstract

We examine the relation between audit firm industry specialization and client disclosure quality. Our motivation for conducting this research arises from the claims made by each of the Big5 public accounting firms that industry specialization enables each to provide superior service and quality to clients in its target industries.

We document a positive association between industry-specialized audit firms and analysts' rankings of disclosure quality in unregulated industries, but no relation in regulated industries. Alternative measures of auditor industry specialization support our conclusions. Our results suggest industry-specialized audit firms add value to clients in unregulated industries in the form of improved disclosure quality.

JEL Classification: M41, M43, M49, G29

Suggested Citation

Dunn, Kimberly A. and Mayhew, Brian W. and Morsfield, Suzanne G., Auditor Industry Specialization and Client Disclosure Quality (February 18, 2000). Available at SSRN: https://ssrn.com/abstract=213510 or http://dx.doi.org/10.2139/ssrn.213510

Kimberly A. Dunn

Florida Atlantic University - School of Accounting ( email )

University Tower
220 SE 2 Avenue
Boca Raton, FL 33431
United States
561-297-3643 (Phone)

Brian W. Mayhew (Contact Author)

University of Wisconsin - Madison - Department of Accounting and Information Systems ( email )

School of Business
975 University Avenue
Madison, WI 53706
United States
608-262-2714 (Phone)
608-263-0477 (Fax)

Suzanne G. Morsfield

Columbia University - Center for Excellence in Accounting and Security Analysis ( email )

3022 Broadway
New York, NY 10027
United States

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