A comparison of auditors' self-reported industry expertise and alternative measures of industry specialisation

Auditing research requiring measures of auditor industry expertise have relied largely on auditors' market shares as proxies for industry expertise. This study systematically documents differences in these proxies for each of the Big Six (now Big Five) and a subset of non-Big Six auditors. Next, it examines an alternative measure based on the industry's share in the auditor's portfolio. Finally, it compares the market shares-based measures and the alternative measure with audit firms' postings of their industry specialisation in their home pages on the World Wide Web. The numbers indicate that the auditors' self-reported specialisations are not correlated with market shares for most auditors. The findings suggest that future studies should consider alternative measures of specialisation in studies of audit market outcomes.