감사보수의 비대칭적 행태

다국어 초록 (Multilingual Abstract)

Using data from 3,360 firm-years, we attempt to make an empirical analysis to test whether audit fees are sticky. Specifically, we examine audit fee behavior over time. We argue that audit fees do not immediately or fully adjust to changes from one year to the next as predicted by a standard audit fee model because of the competitiveness of the audit market. Under the Free Audit Engagement System, it has been argued that budget constraints may lead auditors to perform lower quality audits in Korea. There is a rich literature on audit fees, including the determinants of audit fees and the existence of audit fee premiums representing quality. Nevertheless, the competitiveness of the market for audit services continues to be under-researched. The behavior of audit fees, especially over time, is not well understood and the examination of audit fee behavior over time can improve our understanding of the competitiveness of the audit market. Few studies examine audit fee behavior over time. Our study examines the response of audit fees to changes in the variables that are usually seen as their determinants, such as size, complexity and risk. Specifically, we use a standard audit fee model to estimate expected audit fees for each firmyear. We then compare actual audit fee movements from year to year with the expected movements predicted by the model. We argue that auditors do not increase the audit fee sufficiently, because of competitive markets that force pricing to revert to lower levels. We test for overall stickiness by examining the extent to which changes in actual audit fees are consistent with predicted changes. Our findings show that, when changes occur to the determinants of audit fees, then audit fees do not change to the extent suggested by audit fee models. In particular, upward adjustments are much smaller than downward adjustments. As a supplemental test, this study examines whether the behavior of audit fees is influenced by differential audit quality measured by the well-known Big 4/non-Big 4 dichotomy. Furthermore, we also examine the impact of corporate governance on the audit fee stickiness. The empirical result shows that audit fees get more sticky when a lower quality auditor is engaged to audit the firms. We also find that the monitoring role in the firms with high level of foreign shares alleviates stickiness. However, the ratio of outside directors and the establishment of audit committees are not associated with the alleviation of audit fee stickiness at conventional levels. Our findings provide evidence regarding the competitiveness of the audit market that will be of interest to regulators. In this study, we highlight that the Financial Supervisory Service needs to apply extra care in proposing regulatory system to prevent further audit market concentration. We also argue that the differential approach to inspect auditors can provide audit firms with incentives to maintain high quality control system by generating demands for auditors that are perceived to have better quality control system. In addition, the results of this study suggest that firms with higher level of foreign shares can submit financial statements that are more trustworthy.

참고문헌 (Reference)

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