Earnings Quality: Some Evidence on the Role of Auditor Tenure and Auditors' Industry Expertise
57 Pages Posted: 5 Mar 2009
Date Written: March 5, 2009
Abstract
Prior studies suggest that auditors with short tenure are associated with lower earnings quality because of the lack of client-specific knowledge and/or low balling. In this study, we examine whether industry specialization of auditors and low balling affect the association between auditor tenure and earnings quality. We find that the association between shorter auditor tenure and lower earnings quality is weaker for firms audited by industry specialists compared to non-specialists. In addition, we do not find results consistent with the low balling explanation.
Keywords: auditor tenure, auditor industry specialization, low balling, earnings quality
JEL Classification: M43, M49
Suggested Citation: Suggested Citation
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