감사실패와 주가반응: 청운과 산동회계법인의 사례

Previous studies reported that client stock prices impound the value of auditor reputation since an auditor’s reputation is directly related to the credibility of the clients’ financial statements. Thus, if any firm failure is perceived to be related to audit failure, investors will downgrade the credibility of financial statements that was audited by the failed firm’s auditor. In this context, previous studies reported that Arthur Anderson’s clients experienced the decrease in firm value subsequent to Enron audit failure. In this paper, we study the impact of auditor’s reputation erosion on the overall clients’ market value in Korean audit market. The audit failure of Hankook Kangkwan and Daewoo Group resulted in collapse of two auditors, Chungwoon and Sandong accounting firm. After careful investigation of the news release with regard to the failure of two firms, we identified three event dates for Chungwoon and four event dates for Sandong. We assume that the audit failure news announced at these event dates created uncertainty about the accuracy of financial statements of the two auditors’ clients. We examined cumulative abnormal returns surrounding these event dates and found a statistically significant negative market reaction for clients of two audit firms. Specifically, Chungwoon’s clients experienced negative market reaction on date when court judged a penalty against Chungwoon, and that Sandong’s clients suffered negative market reaction on date when regulatory board issued a sanction against Sandong. We also found that the market reactions surrounding the event date are quite similar to the Arhur Anderson case. However, we could not find a spillover effect.