외부감사인 간 경쟁과 초도감사보수 할인의 관련성 연구

Abstract

The increase in the supply of auditors increases competition among auditors, which leads to unreasonable contracts with audit target companies for audit assignments. Unreasonable audit fees can worsen auditors’ profitability and make it difficult to invest minimal audit effort, which can lower audit quality. In particular, in the initial audit, it is difficult to invest appropriate audit effort due to low audit fees, even though more audit effort should be invested to understand the audit target company. High audit market competition can further lower the audit fees of these initial audit companies, which can lower audit quality. Therefore, this study aims to verify through empirical analysis whether high audit market competition affects initial audit fee discounts. We conducted a regression analysis on the relationship between audit market competition and initial audit fee discounts using a sample of 6,213 KOSPI-listed companies (companies/year) over a 10-year research period from 2002. The research results found that the phenomenon of audit fee discounts for initial audit companies occurred significantly in the group with high audit market competition in the analysis of the average difference by group, and the regression analysis also found that the higher the audit market competition, the higher the initial audit fee discount, supporting the hypothesis. The results of this study, which studied the relationship between audit market competition and initial audit fee discounts, have the following contributions. First, the results of this study will have great implications for researchers studying the audit market and regulatory authorities that establish and enforce policies. Second, the results of this study, which show that high audit market competition can have positive aspects but also negative consequences, will have implications for related organizations that want to determine the supply and demand of auditors.