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《Scientific Decision Making》 2009-01
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Industry expertise and audit quality asymmetry:Evidence from China's three industry groups

ZHENG Jian-ming1,ZHANG Jian-ping1,WANG Min2(School of Business,University of International Business and Economics,Beijing 100029,China)  
Industry expertise is one of the important factors that may affect audit quality.In this paper,we examine the relationship between auditing firms' industry expertise and their audit quality.We find that auditing firms that have industry expertise tend to restrict their clients from inflating earnings,while industry expertise is not related with the extent of clients' earnings-decreasing behaviors.Therefore,industry expertise has an asymmetric impact on audit quality,which reflects the fact that auditors usually take a compromising action under the pressure from their clients when they are exposed to a low-risk environment.Enhancing industry expertise and independence of the auditing firms,reforming and optimizing the governance structures of listed companies,and imposing more rigorous monitors and punishments on violators are the ultimate ways for improvement of audit quality.
【CateGory Index】: F239.4
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