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

20 Pages Posted: 11 Oct 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: November 2012


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 forecasts. 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 that switch their auditors to joint or city industry specialist auditors experience a decrease in forecast error. However, we do not find that firms that 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 nonā€specialists affects forecast dispersion.

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

Suggested Citation

Xie, Yuan and Zhang, Yinqi and Zhou, Jian, National Level, City Level Auditor Industry Specialization and Analyst Forecast Properties (November 2012). International Journal of Auditing, Vol. 16, Issue 3, pp. 248-267, 2012, Available at SSRN: or

Yuan Xie

Fordham University ( email )

441E Fordham Road
Bronx, NY 10458
United States


Yinqi Zhang

American University ( email )

4400 Massachusetts Ave NW
Washington, DC 20016
United States

Jian Zhou (Contact Author)

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

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