Abstract
The objective of this paper is to investigate whether auditor industry specialization is consistent across countries. If the specialized knowledge of auditors can be transferred from one country to another, we can expect that international audit firms show consistent patterns of industry specialization across countries. The literature uses two constructs to measure specialization: the market share of an auditor in a specific market, and a portfolio approach focusing on the major industries in the portfolio of clients of the auditor. Using both approaches on data relating to 28,352 European companies, we find that some European industries, and more specifically the chemical and the business services industries, show a high degree of consistency with respect to the market shares of the international audit firms. We also find evidence of specialization of individual audit firms in specific industry segments.
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