감사품질이 회계이익과 과세소득의 차이에 미치는 영향

Many papers in accounting has focused on the potential of book-tax differences(BTD) to detect earnings management(Phillips et al. 2003; Lev and Nissim 2004; Hanlon 2005; Weber 2006) and investigated the book-tax differences as an indicator of the quality of earnings. That book-tax differences provides information about the quality of earnings has attracted the attention of policy makers as well(Hanlon 2005). So, academic researchers regard book-tax differences as the proxy of quality of earnings and previous empirical results support the relationship between book-tax differences and quality of earnings. Previous studies suggest that public corporation, financial distress, debt-equity ratio, bonus plan threshold, inside ownership concentration, and tax burden affect book-tax differences. This study suggests that audit quality affects book-tax differences. Lennox and Caramanis(2006) suggest that more audit efforts decrease the possibility of earnings management and audit hour is the proxy of audit efforts. Audit efforts affects the probability that the auditor detects an existing problem, whereas auditor independence affects the probability that the auditor reports a detected problem (Lennox and Caramanis 2006). Prior studies investigate whether earnings management is related to factors that could impair auditor independence. Such factors include fees from audit and non-audit services and client importance (Choi et al. 2006; Frankel et al. 2002). But actual audit hour can be determined by client’s size, complexity of operation, and fim risk that may not be related to audit efforts. So, Lennox and Caramanis (2006) use the abnormal audit hour instead of (normal) audit hour. Choi et al. (2006) suggest that the abnormal audit fee is more adequate to capture the fee dependence or economic bonding than normal audit fee. We use abnormal audit hours which are defined as the difference between actual audit hours and the expected level of audit hours (i.e., normal audit hours) and abnormal audit fees which are defined as the difference between actual audit fees and the expected level of audit fees (i.e., normal audit fees). We measure audit quality as abnormal audit hour and abnormal audit fee. This study examines the effect of audit quality on book-tax differences. This implies that this study investigates the effect of audit quality on quality of earnings. The sample consists of non-banking firms (1,224 firm-years) with a December fiscal year-end listed on the Korean Stock Exchange over 2001-2005. The data on taxable income, audit hour and audit fee are collected from the DART(Data Analysis, Retrieval and Transfer System) of Financial Supervisory Service. Other firm-specific financial data is collected from KIS-Value II database. Empirical results suggest that audit hour, audit fee, and abnormal audit fee are insignificantly associated with BTD. But abnormal audit hour is negatively significant associated with BTD. For the firm-years with high abnormal audit hour, abnormal audit hour is negatively more significant associated with BTD. This implies the more abnormal audit hour, the less earning management(the better quality of earnings). This suggest that if auditor actively make an audit effort, earning management is decreased, and BTD is decreased. The decrease in BTD means the increase in the quality of earnings. Therefore, we conclude that low audit efforts increases the extent to which managers are able to report aggressively high earnings. We don’t know prior papers that investigate whether abnormal audit hour or abnormal audit fee is related to BTD. This paper confirms that audit quality (abnormal audit hour) affect BTD(the quality of earnings) and suggests that abnormal audit hour becomes the better proxy of audit quality than auditor type(whether auditor is Big 4 or not). This paper contributes to accounting and tax research that examines book-tax differences, and to several lines of existing research in earnings management and audit quality. Consequently, the findings of this study support the importance on the further detailed disclosure on the audit hour.