Auditor industry specialization and earnings response coefficient: a New Zealand perspective

Date
2011
Authors
Bhattacharya, Somdeb
Supervisor
Habib, Ahsan
Item type
Thesis
Degree name
Master of Business
Journal Title
Journal ISSN
Volume Title
Publisher
Auckland University of Technology
Abstract

The purpose of this research is to examine the relationship between auditor industry specialization (as a proxy for audit quality) and Earnings Response Coefficient (ERC) in New Zealand. Previous research in this field has identified a significant positive correlation between industry specialization of auditors and ERC in other countries. The unique market characteristics of New Zealand provide a new setting to test the hypothesis that companies audited by industry specialized Big 4 audit firms have higher ERC than companies audited by non-specialist Big 4 audit firms. This study is carried out with a sample of NZX listed companies for the time period 2000 to 2009. Using an established model (Balsam, Krishnan and Yang, 2003), the study finds that industry specialization of auditors is not a significant factor which influences ERC in New Zealand. The results show that the established relationship between auditor industry specialization and ERC in other countries does not hold true for the market environment in New Zealand.

Description
Keywords
Auditor Specialization , Earnings Response coefficient , Auditing , ERC , New Zealand , Specialization , Accounting
Source
DOI
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