Do industry-specialized auditors add value to summarized accounting information?

Abstract

This paper examines whether industry-specialized auditors improve the relevance of summarized accounting information. The results indicate that earnings and book value of equity jointly explain more variations in stock returns for clients of industry-specialized auditors than for clients of industry non-specialized auditors, and for clients of Big 4 specialist auditors than for clients of Big 4 non-specialist auditors. The overall findings suggest the positive role of industry-specialized auditors in the value of accounting information and provide empirical implications to audit quality.