The Influence Of Firm Industry Expertise On Audit Quality

In recent years, in order to effectively cope with the increased competition pressure in audit industry, all CPA firms improve the quality of audit to distinguish themselves from other competitors. Industry expertise as a direct effect factor to the quality of audit is paid attention by firm. In order to cultivate and maintain their industry expertise, firms try to find their respective suitable market segments, increasing the input of resources. They develop competitive advantage by providing diversity and differences of audit services, in order to be able to retain the original customers and attract more new customers.Relevant scholars in our country have made very fruitful researches about industry expertise in recent years. The measures of industry expertise, industry expertise and audit performance, audit industry expertise and perspective of auditor behavior were studied by domestic scholars. This paper studies on the relationship between industry expertise and audit quality, is mainly introduced in accordance with the theory analysis and system background of industry expertise and audit quality, measure of industry expertise, audit quality index to substitute auditor industry expertise and audit quality empirical analysis of such steps. Therefore, this article which is from the system background and theoretical foundation of the related theories of firms, lay the theoretical foundation for the subsequent research, and the relationship between auditor industry specialization and audit quality empirically analyze.This paper applies the method of combining normative research and empirical research. Firstly the system background and theoretical basis of influence on auditor industry expertise on audit quality is introduced. Then the paper put forward research hypothesis on the basis of theoretical analysis and carried on the descriptive statistical analysis, multivariate linear regression analysis. The empirical part of this paper manipulate the accruals as a proxy for audit quality, market share to measure industry expertise. And the firm in accordance with the scale of classified as "top ten" and "the other’s", in addition, in order to ensure the consistency of the conclusions, in the robustness test part, respectively adopt method of replacing industry expertise measure method and the change of audit quality alternative variables.The results of the study show that, through the2010-2012years A shares of listing Corporation as the sample, after controlling the impact factors of listing Corporation, financial risk management status scale, etc., the earnings management behavior of auditor industry expertise to the listing Corporation can play an effective inhibition, which verifies the auditor industry expertise is to assume the role of the positive effects on audit quality. In addition, the firm will scale division, through the "top ten" certified public accountants audit firms in the sample, industry expertise obviously, the earnings management behavior is more effective in inhibiting the listing Corporation, to improve audit quality."The rest" Certified Public Accountants industry expertise and listing Corporation accruals is not related significant relationship. Finally, the firm size becomes bigger and the positive effect of industry expertise on audit quality is more obvious.The full text is divided into6parts.The first part is the introduction. Research on motivation and significance, this part mainly introduces the research background and the research methods, research framework and research contents.The second part is the literature review. This part mainly reviews the domestic and foreign related literatures on the effects of industry expertise to the quality of audit, and review in the review based on.The third part is the basic theory and system background. This part mainly introduces the development of industry expertise system background and theoretical basis, which lays a theoretical foundation for the empirical study on the influence of behind industry expertise on audit quality.The fourth part is the theoretical analysis and the research hypothesis. This part will consider the relationship between industry expertise and audit quality which is analyzed in theory and puts forward the research hypothesis.The fifth part is the empirical study. This part is firstly based on the part of theoretical analysis and Research on the assumption, for variable selection and model set. Among them, in the selection of variables, the system summarizes the existing industry expertise and audit quality of alternative indicators measure. Then, do a simple descriptive statistics on the variables, then the industry expertise influence on audit quality role in regulating the size of the firm and do not consider the regulatory role of the size of the firm in two case, respectively, to do regression analysis, finally do the robustness test.The sixth part is the conclusion. This part is based on other parts, summarizes the research conclusion of this thesis, and puts forward the innovation points and deficiencies, and on the basis of the research into how the Chinese CPA firms to become bigger and stronger and put forward the corresponding suggestions.