Industry specialization, learning effect and audit firms' management model

Audit firm is an important entity in capital market, and its management model influence its function. According to the development experience of foreign large audit firm and the guidelines of new audit standard in China, our audit firm should implement the industry specialization management model. This study wants to research the relationship between industry specialization of management model and audit quality in China. The empirical result shows: industry specialization not only has positive influence for audit quality in China's capital market, but also, interestingly, the industry specialization implemented by China's audit firm has a “very fast” learning effect, which can improve the audit quality more effectively. We believe that this study provide the empirical evidence for the future management model of our audit firm and the future policy of regulator in China.