IDEAS home Printed from https://ideas.repec.org/a/taf/raaexx/v28y2021i4p427-453.html
   My bibliography  Save this article

Auditor industry specialization and stock price crash risk: individual-level evidence

Author

Listed:
  • Hua Feng
  • Ahsan Habib
  • H. J. Huang
  • Bao-Lei Qi

Abstract

We investigate the effect of individual auditor industry specialization on stock price crash risk. Although research on individual auditors has been growing, we are not aware of any prior studies that investigate industry specialization at the individual auditor-level and crash risk. Using a large sample of Chinese stocks spanning the period 2003–2015, we find a statistically significant and negative association between individual auditor industry specialization and stock price crash risk after controlling the firm-level effect. Our mediation tests suggest that individual auditor industry specialization decreases the risk of price crash by mitigating earnings manipulation. We further document that the negative association is more pronounced for firms that switch from non-specialist to specialist auditors. We also find some evidence that an auditor’s personal characteristics moderate the association between auditor industry specialization and crash risk. Our results remain robust to alternative measures of individual auditor industry specialization and sensitivity checks.

Suggested Citation

  • Hua Feng & Ahsan Habib & H. J. Huang & Bao-Lei Qi, 2021. "Auditor industry specialization and stock price crash risk: individual-level evidence," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 28(4), pages 427-453, July.
    • Handle: RePEc:taf:raaexx:v:28:y:2021:i:4:p:427-453
    DOI: 10.1080/16081625.2019.1584859
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/16081625.2019.1584859
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/16081625.2019.1584859?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fatima Sultana & Muhammad Aslam & Ammara Sarwar & Amjad Iqbal, 2022. "Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange," Journal of Economic Impact, Science Impact Publishers, vol. 4(3), pages 161-169.
    2. Hou, Fei & Li, Meina & Xu, Yang & Zhou, Song, 2023. "Signing auditors’ cultural background and client investment efficiency," Finance Research Letters, Elsevier, vol. 51(C).
    3. Hendijani Zadeh, Mohammad, 2023. "Regional social capital and stock price crash risk: Evidence from the US," Finance Research Letters, Elsevier, vol. 51(C).
    4. Mahdi Salehi & Grzegorz Zimon & Hayder Adnan Hashim & Ryszard Jędrzejczak & Adam Sadowski, 2022. "Accounting Quality and Audit Attributes on the Stock Price Crashes in an Emerging Market," Risks, MDPI, vol. 10(10), pages 1-24, October.
    5. Hou, Fei & Shen, Huayu & Wang, Ping & Xiong, Hao, 2023. "Signing auditors' cultural background and debt financing costs," International Review of Financial Analysis, Elsevier, vol. 87(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:raaexx:v:28:y:2021:i:4:p:427-453. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/raae20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.