감사인의 감사 및 비감사 보수와 고객기업의 보수적 회계처리 수준 사이의 관계|RISS 상세보기

다국어 초록 (Multilingual Abstract)

This study examines the association between abnormal audit and non-audit fees and the audit quality measured by the magnitude of the accounting conservatism. Abnormal audit or non-audit fees imply the level of fees in excess of the normal level of fees. If auditors receive excessive level of fees - either audit or non-audit fees, auditors may impair audit quality to maintain close relationship with clients to receive the fees continuously. Since the Enron incident and subsequent collapse of Arthur Andersen which occurred at year 2001, regulators have great concern if the excessive non-audit service impairs audit quality or financial reporting quality. Many studies also have investigated this issue either empirically or theoretically. Empirical studies use various proxy for the audit quality but the results up to now are mixed at best. However, not many studies examines the role of excessive audit fees in this context. This study extends the prior research and examines both audit and non-audit fees with respect to the magnitude of accounting conservatism of the client firms. If excessive fees impair the audit quality, auditors may allow client firms to engage in aggressive accounting practices which result in lesser magnitude of the conservatism. In this study, the conservatism implies the degree that how quickly the financial statements reflect economic losses compared with economic gains. This is the concept that first introduced by Basu(1997) and adopted by various accounting research subsequently. But surprisingly, none of the prior studies try to link the conservatism measures with respect to audit fees. Like excessive non-audit fees impair auditor independence, excessive audit fees could impair the auditor independence in the same way. This study is intended to explore this possibility. In addition, after the passage of Sarbanes-Oxley Act in 2002, the provision of non-audit service to clients by auditors are strictly prohibited or throughly monitored in the U.S. Similarly, Financial Supervisory Service of Korea (equivalent to the Securities and Exchange Commission of the U.S.) also regulate auditors` provision of the non-audit service. Thus, auditors could be very careful when they provide non-audit service to their audit clients. Media and academics also have greate concern on the effect of non-audit service. However, the concern on audit service has not been changed much. We expect that this study fills the void in this area. Moreover, because we do not know on ex ante basis if total fees or excess fees which are defined by the difference between total fees and normal level of fees are related to the auditor`s incntive which could influence the audit quality, we use both measures in our analyses. This study uses 3,483 firm-year observations collected over 2000 to 2005 period. We collect all the non-financial industry observations as long as all the necessary data are available and the firm has December fiscal year-end. In the analyses, the magnitude of the conservatism is measured by Ball and Shivakumar`s (2005, 2006) methods. The measure was developed most recently and known as the superior method to Basu`s (1997) measure of conservatism which has been used mostly frequently in prior studies. Specifically, the conservatism measure developed by Ball and Shivakumar(2005, 2006) is based on three different models: cash model, Dichev and Dechow(2002) model, and Jones(1991) model. We use all of those three models in our analyses in order to show the robustness of our empirical findings. To perform empirical analyses, we follow the following procedures. First, we measure excessive level of audit and non-audit fees by estimating normal level of fees. To do so, we regress the determinants of audit and non-audit fees to find out the coefficients on each determinants. Using the estimated models, we calculate the normal level of the fees by plugging the values of each variables into the model. The abnormal fees are measured by the difference between actual fees minus the estimated normal fees for both audit and non-audit fees, respectively. Second, we add the abnormal fees in the conservatism models to see if the level of conservatism changes depending on the level of abnormal fees. The empirical results reveal that the financial statements become less conservative as both abnormal audit or non-audit fees increase. These results are robust in various sensitivity analyses. In addition, the level of audit and non-audit fees themselves are also negatively associated with the degree of conservatism. These results imply that higher level of both audit and non-audit fees could impair audit quality or financial reporting quality. Because the findings in this study are different from those in Ruddock et al.`s (2006) study, which show that the non-audit fees are not associated with Basu`s (1997) measrue of conservatism, we try to replicate Ruddock et al.`s (2006) finding. We find that the Basu`s (1997) conservatism measure is significantly associated with neither audit nor nonaudit fees in our sample firms. These inconsistency suggests that our initial significant results are due to the use of Ball and Shivakumar`s (2005, 2006) measure of conservatism, which is known to be a better measure than Basu`s (1997) measure. These findings provide several valuable insights into the effect of audit and nonaudit fees toward regulators, practitioners, investors, as well as academics.

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참고문헌 (Reference)

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