감리지적 예측확률로 측정한 감사품질이 재량적 발생액에 미치는 영향

After global financial crisis of 2008, the public begins to pay attention to the reliability of accounting information. For this reason, the relation between audit quality and reliability of accounting information has been examined in lots of prior literatures. They investigate the relation between audit quality and reliability of accounting information using various proxies for audit quality. Becker et al.(1998) found that the level of discretionary accruals is significantly lower for Big 6 clients than non-Big 6 clients. Their findings suggest that high audit quality proxied by Big 6 auditors is related with effective monitoring, which limits manager's ability to make opportunistic accrual choices. Park and Shim(2002), however, examined the effects of auditor type on discretionary accruals using Korean data. They found that Big 6 auditors were not more effective in constraining opportunistic earnings management than non-Big 6 auditors. In addition, they investigated the effects of industry-specialized auditors on discretionary accruals, but they did not find a significant relation between industry-specialized auditors and discretionary accruals. In the context of mixed evidence about the best proxy of audit quality, researchers need to develop new proxies for audit quality. To develop new proxy for audit quality, I estimate the probability for enforcement actions by the Financial Supervisory Service(FSS) using both auditor's and client's characteristics. In particular, in logistic regression a dependent variable is a dummy variable that is given 1 if the client is enforced by FSS during a fiscal period, and 0 otherwise. Explanatory variables are auditor characteristics. In addition, client's characteristic variables are also included to control client‘s individual audit environments. I next examine the effect of audit quality on discretionary accruals. I measure audit quality using prediction probability of enforcement actions by the FSS and employ Pae(2005) model to measure discretionary accruals that includes operating cashflows and lagged total accruals in Jones(1991) model. The results are as follow. First, I find that clients of auditor with more CPAs and greater market share, more education & training expenditure are less likely to be enforced by the FSS, but I find that clients of auditors with longer CPA's career and higher ownership concentration are more likely to be criticized by FSS. Second, I find that clients of auditors with higher audit quality are more likely to have lower discretionary accruals and are thus more likely to enhance the reliability of accounting information. The findings have implications for regulators, auditors, managers, and researchers. First, these findings will help the clients and regulators to predict quality of auditors and contribute to improve reliability of accounting information. Second, these findings support the notion that auditor's characteristics are fundamental element in the production of high-quality audit. Third, these findings suggest a new proxy to measure audit quality for other researchers. This study has several limitations. Specially, we rely on the disclosure of FSS for the actual presence of audit failure. To the extent that there is a systematic bias in choice to identify and disclosure audit failure, our sample may not represent the true underlying population of firms with lower-quality auditor.