비상장중소기업의 외부감사 및 차별적 감사수요가 기업의 신용등급에 미치는 영향 - 처음으로 외부감사를 받는 기업을 대상으로 -

This paper investigates the effect of external audits and audit quality on credit rating using non-listed small firms. Specifically, we compare the first year that received a external audit with the previous year that did not received a external audit in terms of change in credit ratings. We predict that if credit rating agencies expect the increased credibility of accounting information after the initial external audits, the credit ratings of firms received the initial external audits will be goes up. However, if credit rating agencies do not expect any impact of external audits, there is no (or little) effect on credit ratings. The credit rating is considered as a useful indicator to investors and bondholders, as well. Expecially, for non-listed firms, information about credit rating is important resources for various business decisions. According to Kwak and Park(2010), credit rating of non-listed companies affects audit fees while listed firms' audit fees are not. They also find that this association is stronger for smaller companies. This result suggests that credit rating is a useful information in determining audit fee of non-listed small companies. When it comes to agency theory, companies tend to put more weight on reduction of information asymmetry. As one of signals to reduce information asymmetry, companies hire a independent auditor to deliver information on creditability of financial report. Specially, for firms suffered from high information asymmetry like non-listed firms, this signal works well. To further investigate a differential demand for audit quality, we examine the effect of Big-sized auditors using the only firms with received external audit. The credit ratings of firms received a external audit from Big 4 audit firm will be changed when there is any impact on selection of Big 4 audit firm. Prior studies of Dopuch and Simunic(1982) and Francis et al.(1999) indicate that the effect of Big 4 audit firms on earnings quality is more likely to higher than that of non-Big 4 audit firms. Therefore, we predict that firms with Big 4 audit firms are more likely to associated with higher credit ratings. We develop two hypotheses based on our predictions. First, the credit ratings of the firms received external audit for the first time are more likely to increase than the previous year. Second, the credit ratings of the firms received external audit from Big 4 auditors are more likely to increase than that of the firms received external audit from non-Big 4 auditors. This paper empirically explores these predictions with 8,288 firm-year observations from non-listed small firms for the period of year 2001 to 2008. The credit rating information comes from KIS-Library. The credit ratings have from 1 point to 10 points. 1 point represents firms with the worst credit rank and 10 points represents firms with the best credit rank. And we use dummy variables for external audit and audit quality. Other control variables are adopted in the credit rating model based on prior studies. Also different time period is considered in the model by using t+1 in the dependent variable and t in the independent variables (Kim et al. 2006; Jiang 2008). Our findings are follow. First, we find that credit ratings of firms received a initial external audit are not different compared to the previous year that firms not received a external audit. However, when the sample is divided into two groups, mandatory auditing and voluntary auditing, the credit ratings of firms with voluntary auditing significantly increase while the credit ratings of firms with mandatory auditing are insignificant. Second, among firms received a external audit, the firms with Big 4 audit firms are more likely to associated with the high credit ratings after controlling for other variables. However, this result just holds for mandatory auditing, suggesting that the effect of audit quality is a significant only for mandatory auditing. In other words, for firms received voluntary audit, a external audit is a important signal regardless of type of auditors. In summary, for non-listed small firms, the effect of external audit on credit ratings is very significant and the effect of audit quality works only for mandatory audit. The findings in this study has various implications. The results of this paper suggest that auditing services gives a good signal in terms of credibility of financial reports and affect credit ratings of non-listed small firms. This finding is important in terms of showing that the effect of external audit is valid on even non-listed firms. More interesting finding is that the effect of external audit is stronger for voluntary audit, which means that just receiving audit voluntarily gives a good signal in the market, specifically credit rating agencies. Therefore, these findings are very useful and provide a lot of important implications to regulators, investors and creditors that are interested in non-listed companies. Academics can also apply the discussion in this paper for related researches.