Client importance, industry specialization and auditor reporting decision

This paper attempts to investigate the effect of industry specialization on the relationship between client importance and auditor reporting decision based on microcosmic perspective. The results show that auditors are less likely to issue severe opinion for the high risk client as client importance increases. And similarly , for the auditor without industry specialization, the relationship between client importance and auditor reporting decision is still significantly negative. But, for the auditor with industry specialization, the relationship between client importance and auditor reporting decision isn't significant. The results suggest that the industry specialization of auditor can inhibit the negative influence of client importance on auditor reporting decision, and the auditor will not compromise in the audit report decision only because of economic dependence.