감사인 품질관리에 대한 공적규제와 회계정보의 가치관련성

Accounting information is to contribute to the efficient distribution of economic resources by resolving information asymmetry between management and external interested parties. To fully fulfill this function of accounting information, first of all, management has to maintain transparent accounting information, and auditors have to prudently audit the accounting information with professional due cares. Auditors' professional due cares in the audit processes depend on their quality control (QC) systems, which comprises entity-level QC systems and individual engagement level QC procedures. In the past, such auditors' quality control systems are subject to self-regulation; i.e. the auditors' professional organizations such as the Korea Institute of Certified Public Accountants (KICPA) or the American Institute of Certified Public Accountants (AICPA) had performed peer-review processes to monitor whether each audit firms' quality control systems operate properly. Recently, such self-regulation on auditors' audit quality system has been replaced by the public scrutinies and monitoring such as supervisory reviews by the Financial Supervisory Service (FSS) or inspections by the U.S. Public Company Accounting Oversight Board (PCAOB) on auditors' self- quality control systems. The FSS is also considering introducing auditor registration systems in Korea as have been implemented by PCAOB and many other foreign country regulators. These global changes are in line with the premise that auditor registration and regulatory authority’s investigation on the quality controls of the (registered) auditors would eventually improve audit quality. Actually, Lee (2011) has reported that audit quality of auditors subject to the FSS's quality control reviews or registered with foreign regulatory authorities are better than those not subject to such regulations. Meanwhile, there are many controversies on the effects of public regulation, comparing to self-regulation, such as whether it would improve independence or reduce professional competency of quality control reviewers, or cause increased costs. Therefore, effectiveness and results of conversion into public regulation on auditor's quality control should be evaluated in diverse aspects. Prior studies made such evaluations using abnormal accruals, audit opinion types, auditor selection decisions and others. DeFond (2010) reviewed relevant literatures and proposed to evaluate trade-offs of enhanced independence and lack of professional competency resulting from regulatory changes related to auditors’ quality control systems. In this regard, we examine the effects of public regulation on auditor's quality control systems in terms of investors' perception of value relevance of accounting information. Specifically, we tested whether value relevance of accounting information audited by the auditors subject to the FSS's quality control reviews or registered with foreign regulatory authorities are different from those not subject to such regulations. We found that earnings information audited by those auditors subject to the FSS's quality control reviews or registered with foreign regulatory authorities have incremental value relevance, which are consistent with the hypotheses of this study. Such results remain consistent in additional analyses with employing certain control variables (firm size, leverage and ROA). This result indicates that investors are highly recognizing value relevance of accounting information audited by the auditors who are subject to the FSS's quality control reviews or registered with the foreign regulatory authorities. Recent study (Dichev and Tang 2008) reported that earning's value relevance is continuously decreasing over years, for which we need to develop an strategy to respond to the trends. This result gives practical implications that improving reporting credibility by conversion to or enhancements of public regulations. Meanwhile, additional analysis for comparison of before and after the regulation changes in the FSS's quality control reviews or registration with the foreign regulatory authorities shows that such incremental value relevance of earnings exists only for the changes of regulation for the FSS's quality control review. We expect such difference in the results would have come from the environmental factors with respect to the accounting regulation changes. We estimate that change of the FSS's quality control review program has been well recognized by the investors upon implementation of the regulatory changes, but the auditors' registration with foreign regulatory authorities would not have been since such efforts were well known to the auditors but were out of the sights of the Korean investors. i.e. such regulation changes in the foreign countries and subsequent Korean auditor's registrations therewith began in 2004 when the auditors were not aware of the details. Another additional analysis for Non-Big 4 samples, we found that, with respect to the FSS's quality control review and registration with the foreign regulatory authorities, earnings of the financial statements audited by such auditors have significant positive value relevance, which is also consistent with the results for all Big 4 and Non-Big 4 auditor samples. This finding is consistent with the prior study (Lee 2011) which reported that auditors paying more voluntary quality control efforts show better audit quality. Also, the above results for Non-Big 4 auditors indicate that the investors are assuming such voluntary efforts importantly as well. This has regulatory implications that various audit quality indicators which would represent audit quality of the auditors, and, also, should be communicated (or disclosed) to the investors in a proper and timely manner. Our findings make some important contributions to the literature and regulatory bodies in that both conversion into public regulations on auditors' quality control and the auditors making public regulations on auditor's quality control are perceived positively by the investors.