National Level, City Level Auditor Industry Specialization and Analyst Forecast Properties

International Journal of Auditing, Forthcoming

Posted: 5 Sep 2012

See all articles by Yuan Xie

Yuan Xie

Fordham University

Yinqi Zhang

American University

Jian Zhou

University of Hawaii at Manoa

Multiple version iconThere are 2 versions of this paper

Date Written: 2011

Abstract

We examine the relation between Big N industry specialist auditors and analyst forecast properties using a national and city level industry specialist framework. Consistent with the assumption that audit quality is positively related to financial reporting quality and predictability of accounting earnings, our results show that firms audited by joint city and national leaders have more accurate analyst forecast. We also find that firms audited by city level industry leaders, either alone or jointly with national leaders have lower analyst forecast dispersion. In addition, our results are more pronounced for small firms that suffer from higher information asymmetry. Finally, we find some evidence that firms which switch their auditors to joint or city industry specialist auditors experience a decrease in forecast error. However, we do not find that firms which switch their auditors away from industry specialist auditors experience an increase in forecast error, neither do we find that auditor switch between industry specialist auditors and non-specialists affects forecast dispersion.

Keywords: auditor industry specialization, national level industry specialist, city level industry specialist, analyst forecast accuracy, analyst forecast dispersion

JEL Classification: M41

Suggested Citation

Xie, Yuan and Zhang, Yinqi and Zhou, Jian, National Level, City Level Auditor Industry Specialization and Analyst Forecast Properties (2011). International Journal of Auditing, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2142031

Yuan Xie

Fordham University ( email )

441E Fordham Road
Bronx, NY 10458
United States

HOME PAGE: http://www.fordham.edu/info/22941/full-time_faculty/4970/yuan_xie

Yinqi Zhang (Contact Author)

American University ( email )

4400 Massachusetts Ave NW
Washington, DC 20016
United States

Jian Zhou

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
462
PlumX Metrics