Accounting Information Quality, Investment Efficiency, and Auditor Specialization

This study was conducted aiming at examining the impact of accounting information quality (AIQ) on overinvestment and underinvestment problems by considering the impact of auditor specialization on the industry. The statistical population consisted of the listed companies on the Tehran Stock Exchange from 2013 to 2017. According to the result, accounting information quality contributed to the reduction of overinvestment and underinvestment problems. Also, the auditor specialization was mostly effective in improving investment efficiency. It was also found that accounting information quality and the auditor specialization were partially alternative mechanisms in enhancing investment efficiency. There was a significant positive relationship between accounting information quality and investment efficiency in companies where the auditor was a specialist in the industry. The conclusion of this paper might be the first empirical evidence to support prior research that auditor specialization on the industry is positively related to investment efficiency at the Tehran Stock Exchange. Also, it shows the impact of the replacement of auditor specialization and accounting information quality was studied.