Article2008

The Influence of Audit Firm Specialization on Analysts’ Forecast Errors

75 citations0/0 files storedAuditing A Journal of Practice & Theory

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Auditing, Earnings Management, Governance Forecasting Techniques and Applications Corporate Governance and Financial Management

Abstract

SUMMARY: This study investigates audit firm specialization in settings where managers have incentives to modify earnings to achieve analysts’ earnings forecasts. The results indicate that audit firms that have a large market share of clients within a particular industry, and audit firms that receive a significant portion of their firm revenues from a specific industry, are associated with audited financial statement earnings that increase absolute levels of analysts’ forecast error and are less likely to just meet or beat analysts’ forecasts.

Citations in this library

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References

1973Risk, Return, and Equilibrium: Empirical Tests 1988The Theory of Industrial Organization 1981Auditor size and audit quality 1998The Effect of Audit Quality on Earnings Management*1980The Pricing of Audit Services: Theory and Evidence 1999Earnings Management to Exceed Thresholds 2009On the use of instrumental variables in accounting research 2002The rewards to meeting or beating earnings expectations

Cited by

2011CEO Centrality and Meeting or Beating Analysts’ Earnings Forecasts 2011Audit firm industry specialization and audit outcomes: Insights from academic literature 2020Protection of proprietary information and financial reporting opacity: Evidence from a natural experiment 2017Are Audit-Related Factors Associated with Financial Reporting Quality in Nonprofit Organizations?2014Changes in the measurement of fair value: Implications for accounting earnings 2015Analysts' Cash Flow Forecasts, Audit Effort, and Audit Opinions on Internal Control

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