Abstract
We argue that the association between auditor industry specialization and audit quality depends on how long the auditor has been a specialist. Using a sample of Big 4 audit clients from 2003-2014, we find that auditors who have only recently gained the specialist designation (unseasoned specialists) produce a level of audit quality that does not surpass that produced by non-specialist auditors, and is generally lower than the audit quality produced by seasoned specialists. We estimate that the seasoning process takes two to three years. In contrast to recent literature finding no effect of specialization after propensity score matching, we continue to find that seasoned specialists produce higher quality audits than unseasoned auditors after matching.
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