Audit Office Industry Diversity and Audit Quality

Erik L. Beardsley, Nathan C. Goldman, Thomas C. Omer

Research output: Contribution to journalArticlepeer-review


This study examines the association between the industry diversity of an audit office and audit quality, where industry diversity is the extent to which clients differ by industry classification. We find a negative association between industry diversity and audit quality that is robust to controlling for other audit office and client characteristics. We observe this association while holding the level of audit office specialization or expertise in a particular industry constant. The association is most apparent at the low end of the distribution of industry diversity, where audit offices with the least diverse client portfolios have the highest audit quality. We also find that the association exists for both small and large audit offices as well as both industry specialists and non-industry specialists. However, we do not observe the association when the office audits clusters of clients, where clusters are three or more clients in the same industry.

Original languageEnglish (US)
Pages (from-to)777-805
Number of pages29
JournalJournal of Accounting, Auditing and Finance
Issue number4
StateAccepted/In press - 2020
Externally publishedYes


  • audit quality
  • industry diversity
  • industry expertise
  • knowledge management
  • restatements

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)


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