경영자 예측정보와 감사보수 및 감사시간

This paper examines the effect of earnings management risk related to voluntarily disclosed management forecast on audit fees and audit hours. Prior research suggests that firms' voluntary disclosure should lower information asymmetry in the market and, thus, reduce the cost of capital. However, the firms that fail to meet their voluntarily disclosed forecasts experience the decrease of stock prices and the loss of reputation. Therefore, managers have incentives to manipulate reported earnings to meet or beat their voluntarily disclosed forecasts. Auditors who have responsibilities to provide assurance to reliability of the financial statements and internal control system may concern about audit risks arising from managers' earnings management incentives. Especially, the lack of forecast accuracy is associated with internal control problems. As a result, auditors may increase audit fees for heightened audit risks and spend more audit hours for substantive evidences to reduce the audit risks related to earnings management possibilities. We analyze 2,252 firm-year observations over the 2002-2008 period. We first find that the firms that are voluntarily issuing management forecast have significantly higher audit fees and audit hours regardless of types of forecasted items. This suggests that auditors reflect the earnings management risks regarding management forecasts in audit decision, resulting in increased audit hours and higher audit fees. Second, audit fees and audit hours tend to be higher when management forecasts are less accurate. This implies that auditors consider inaccurate management forecasts as an evidence of management risks and increase their audit efforts to reduce the audit risks. Finally, we show the results do not change if we control audit hours in audit fees decision model. This suggests that the potential endogeneity problem does not drive our results. Based on these empirical results, we infer that management forecasts affect the auditors' audit decisions since they think management forecasts affect audit risks. Therefore, in order to increase level of assurance and control audit risks, they increase audit hours and charge higher audit fees for the firms that issue management forecasts. This study provides the first systematic evidence of an impact of firms' voluntary disclosures on auditors' decision makings such as audit efforts and audit fees.