Are all industry specialist auditors the same?

Steven F Cahan, Debra Coleman Jeter, Vic Naiker

Research output: Contribution to journalArticleResearchpeer-review

57 Citations (Scopus)


We expand upon the traditional market share-based measure of industry specialization by auditors to address the following question: Are industry specialist auditors who obtain their market share by auditing varying proportions of clients in an industry similar in terms of product (audit) quality and price (audit fees)? Our analyses suggest that the audit market is characterized by a type of segmentation in which some specialists pursue product differentiation strategies, focusing more extensively on the acquisition of requisite expertise, while others pursue cost minimization strategies, producing lower cost, lower quality audits. We find that audit fees and quality are higher (lower) when the specialist gains significant market share by auditing a low (high) proportion of clients in that industry. Our evidence suggests that specialists pursue different strategies in different settings. In some cases, specialist auditors may actually be low-end producers, raising a question of whether the specialist label is even appropriate.
Original languageEnglish
Pages (from-to)191 - 222
Number of pages32
Issue number4
Publication statusPublished - 2011
Externally publishedYes

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