감사인 강제교체가 감사품질에 미치는 영향

This study explores whether Korea’s mandatory auditor rotation regime enforced from 2006 to 2008 improved audit quality. The logic behind Korea’s adopting a mandatory audit rotation regime is that a possible collusion resulting from long term auditor-client relationship could affect auditor independence, and therefore audit quality. While mandatory audit rotation had long been an issue among many advanced countries, accounting scandals involving Enron has made it more urgent. The U.S accounting regulators attribute those accounting scandals to a long-term auditor-client relationship between Enron and its auditor Arther Anderson. The U.S General Accounting Offic, or GAO for short, surveyed the feasibilty of enforcing a mandatory auditor rotation regime when the U.S Congress discussed a law, now known as Sarbanes-Oxley Act, or SOX, to reform accounting practices. On a survey conducted by GAO who asked auditors at top US audit firms, Fortune 1000 company managers and its audit committee chairpersons whether a mandatory audit rotation regime is desirable, most of the respondents said that the cost of enforcing mandatory audit rotation would exceed the benefits from it. (GAO, 2003). Based on these findings, the Securities Exchange Committee, or SEC, chose not to include mandatory audit rotation provisions in SOX. SEC’s decision seems due to its concerns that with little benefit being expected, enforcing a mandatory audit rotation regime could only cause additional costs. As talk went on about the feasibility of mandatory audit rotation in the U.S, Korea reformed the External Audit Act in December, 2003 to include mandatory audit rotation provisions in External Audit Act. But the new mandatory audit rotation provisions had applied to fiscal years starting Jan. 1, 2006 or later until they were abolished in the Feb, 2009 amendment, making Korea’s mandatory audit rotation regime a three-year experiment. As mentioned above, Korea’s mandatory audit rotation regime was introduced when the U.S regulators began to discuss how to regulate auditing practices by law. GAO conducted a survey and, based on the survey findings, decided not to enforce the first mandatory audit rotation regime would-be in U.S history. But in Korea, a mandatory audit rotation regime was adopted without thorough reviews of its consequences in the lawmaking process. The fact that the US considered enforcing mandatory audit rotation seriously seemed to have made it more convincing than empirical evidences for Korean regulators that a new mandatory audit rotation regime would improve audit quality. The reasons that Korea again went back to a non mandatory audit rotation regime is, first, the US decided not to adopt mandatory audit rotation regime and, second, the newly introduced mandatory audit rotation regime in Korea had been under a severe criticism from the auditing profession. Nevertheless, no empirical research has been done on whether mandatory audit rotation improved audit quality in Korea. So this study tries to explore the effects of mandatory audit rotation on audit quality, one of the intriguing research topics among many advanced countries, but defies research efforts because of the lack of relevant data. Because of difficulty in measuring audit quality - a qualitative variable - directly, this study uses a proxy which is discretionary accruals (DA, henceforth) and measures it using two models; modified Jones’ (1991) and Kothari et al’s (2005). Results show that there is no significant relationship between mandatory audit rotation and DA. There is no significant difference in DA between sample periods which covers three years before auditor switching and control periods which cover three years each before and after the sample periods. There is no difference in DA between the sample periods and the same time periods of the control firms. The results are the same under both models and so are they when a new variable Big 4 Auditor, which denotes whether the client is audited by Big 4 auditor or not, is added to the models. This study, despite its ex-post nature, has made contributions academically in that as the first of its kind in Korea this study empirically tests the effects of mandatory audit rotation on local audit quality. This study has its implications both to countries who consider enforcing mandatory audit rotation in the future or those who put mandatory audit rotation in place at present.