감사인의 산업 전문성과 감사품질 사이의 관계

Several prior studies performed in the U.S. document that industry specialist auditors provide high-quality audit service. In contrast, Korean studies yield mixed results on the effect of an industry specialist auditor. Therefore, prior studies generally suggest that the effect of the industry specialist auditor is not clear. To explore this difference in the empirical findings between Korea and the U.S., this study repeats the analysis by classifying firms into three sub-samples: firms engaging in larger magnitude of income-increasing/income-decreasing earnings management, and the others that do not engage in extreme (either income-increasing or income-decreasing) earnings management. This approach is intended by the implicit assumption that industry specialist auditors may not restrict all kinds of earnings management uniformly. When we use the full sample and adopt the propensity score matching technique to control for client characteristics, consistent with the findings in most of the prior Korean studies, we fail to find the strong and consistent evidence of industry specialist auditors providing high-quality audit services. However, when we perform analysis with the three sub-samples, the results change dramatically. For the firms engaging in the larger magnitude of income-increasing earnings management and the others, we find that industry specialist auditors reduce the magnitude of income-increasing earnings management. For the firms engaging in the larger magnitude of income-decreasing earnings management, we find that industry specialist auditors promote more income-decreasing earnings management, suggesting that they tend to use a more conservative audit approach. These findings provide important implications into the effect of auditor industry expertise.