Audit tenure and earnings quality - do auditor's industry specialisation matter? Evidence from Tunisia Online publication date: Sat, 30-Aug-2014
by Ines Hakim Hbaieb; Mohamed Ali Omri
International Journal of Critical Accounting (IJCA), Vol. 6, No. 3, 2014
Abstract: Prior studies suggest that auditor's industry specialisation are associated with highly earnings quality because the increase of client-specific knowledge. However, the effect of audit tenure on earnings quality is mixed. In this study, we examine whether auditor's industry specialisation affect the association between auditor tenure and earnings quality. Our empirical findings suggest that auditor's industry specialisation improve earnings quality than non-specialists audit firms. Additionally, results support the assumption that medium auditor tenure (auditors in their fourth, fifth, and sixth year with a client) is the best period of audit mission. By comparing the relative effects of audit industry specialisation on the association between audit tenure and earnings quality, we suggest that audit-firm specialisation plays a key role in determining the quality of earnings.
Online publication date: Sat, 30-Aug-2014
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