Audit partner specialization: the case of Andersen followers

Albert Nagy

Managerial Auditing Journal, 2012, vol. 27, issue 3, 251-262

Abstract: Purpose - The purpose of this paper is to examine the effects of auditor specialization, at both the partner and office levels, on audit quality within a developed market (the USA). Design/methodology/approach - This study exploits the environment created when several large accounting firms purchased select Andersen offices following the firm's demise in 2002. OLS regressions were estimated from a sample of companies that assumingly followed their Andersen partner to the purchased accounting firm to examine the association between abnormal discretionary accruals and auditor specialization at both the office and partner levels. Findings - The descriptive statistics and regression results show a significant negative relation between audit partner specialization and abnormal accruals. Furthermore, the results suggest that partner level specialization has a greater effect on audit quality than that of office level specialization. Originality/value - This study contributes to the literature by examining the effects of auditor specialization at both the office and partner levels on audit quality within a developed market. The results of this study should be of interest to academics, investors, and regulators and help them in their assessments of auditor quality.

Keywords: United States of America; Auditors; Task specialization; Auditor specialization; Audit quality; External auditing; Andersen; Abnormal accruals (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:02686901211207483

DOI: 10.1108/02686901211207483

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