A financial restatement not only represents the breakdown in the quality of financial report，but also in the audit.It will cause a negative effect on the capital market.We argue that the restating firms will replace their auditors by the auditors with industry specialization to restore reputational capital lost and increase the audit quality.Based on the PSM DID method，we use the Chinese A share listed companies from 2004 to 2014 as research samples to explore the relationships among financial restatement，auditor industry specialization，and auditor switch.This paper finds：（1）After restating their financial statements，the listed companies are more likely to switch their auditors，and are more likely to change to these firms with a high degree of industry specialization.（2）Compared with companies with unintentional misstatement，companies with intentional misstatement are more likely to change to auditors with a high degree of industry specialization.Furthermore，the higher the degree of earnings misstatement is，the more likely to switch to the auditor with a high degree of industry specialization.Our paper contributes to examining the role of the market and the market mechanism of China，and a better understanding of economic consequences and the effect of financial restatement on management behaviors of listed companies.