This study uses a national sample of eligible jurors to examine the impact of source credibility and blame attribution on the decision making process of jurors in an audit malpractice suit. We use industry specialization to determine the influence of source credibility and blame attribution on juror’s verdict. Industry specialization increases the perceived credibility of the audit firm which in turn decreases the blame attributed to the firm for the audit failure. Industry specialization indirectly decreases jurors’ propensity to find an audit firm negligent by increasing its perceived credibility. Jurors also directly attribute more blame to industry specialist auditors, which increases the likelihood of a negligence finding.
The impact of industry specialization is completely mediated by source credibility and blame attribution. Industry specialization indirectly decreases the award of compensatory damages by increasing attribution of blame but is compensated by the perceived credibility of the firm. Lastly, specialization has no impact on the award of punitive damages which is driven only by the direct effect of blame attributed to the firm. The results indicate that trial counsel for audit firms should emphasize the enhanced credibility of industry specialist auditors and that industry specialist auditors are subject to the same legal standard of care as non-industry specialist auditors.