Does Auditor Industry Specialization Improve Audit Quality?

Journal of Accounting Research, Forthcoming

Posted: 8 Jun 2013

See all articles by Miguel Minutti-Meza

Miguel Minutti-Meza

University of Miami - Department of Accounting

Date Written: June 7, 2013


This study examines whether auditor industry specialization, measured using the auditor’s within-industry market share, improves audit quality and results in a fee premium. After matching clients of specialist and non-specialist auditors on a number of dimensions, as well as only on industry and size, there is no evidence of differences in commonly used audit-quality proxies between these two groups of auditors. Moreover, there is no consistent evidence of a specialist fee premium. The matched-sample results are confirmed by including client fixed effects in the main models, examining a sample of clients that switched auditors, and using an alternative proxy that aims to capture the auditor’s industry knowledge. The combined evidence in this study suggests that the auditor’s within-industry market share is not a reliable indicator of audit quality. Nevertheless, these findings do not imply that industry knowledge is not important for auditors, but that the methodology used in extant archival studies to examine this issue does not fully parse out the effects of auditor industry specialization from client characteristics.

Keywords: Audit Quality, Earnings Quality, Audit Fees, Auditor Industry Specialization, Matching, Peer Firms

JEL Classification: M41, C50

Suggested Citation

Minutti-Meza, Miguel, Does Auditor Industry Specialization Improve Audit Quality? (June 7, 2013). Journal of Accounting Research, Forthcoming, Available at SSRN:

Miguel Minutti-Meza (Contact Author)

University of Miami - Department of Accounting ( email )

Coral Gables, FL 33146-6531
United States
305-284-6287 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics