비정상 감사보수 및 비정상 비감사보수가 보수주의에 미치는 영향 - Khan and Watts(2009) 모형을 중심으로 -

This study investigates the association between abnormal (non-) audit fees and the level of conditional conservatism. We examine whether the provision of both audit and non-audit services by a firm's external auditor deteriorates auditors' independence and adversely affects audit quality based on our two hypotheses. In our first hypothesis, we conjecture that paying audit fees above the normal levels will impair auditor's independence, thereby relaxing the asymmetric recognition of losses versus gains in conservatism for the client. Secondly, we hypothesize that the enactment of Class Action Law on Security Transaction in January 2005, which increased the litigation risk for the auditors, will mitigate the extent of deterioration of auditors' independence resulted by abnormal audit fees. To test the two hypotheses, we use a firm-year specific conservatism measure of C-Score in Khan and Watts (2008), which is recently developed and sophisticated model for estimating conditional conservatism. Using a sample of 5,120 firm-year observations for the period 2000-2011, we first find a negative association between abnormal audit fees and the level of conditional conservatism. In other words, as the extent of abnormal audit fees increases, it impairs auditors' independence, thus resulting in deterioration of financial reporting quality of the client firm. In contrast, we do not find any significant association between abnormal non-audit fees and the level of conditional conservatism. The results are robust to several sensitivity tests, reinforcing our findings that while excessive audit fees may reduce the audit quality, excessive non-audit fees may not necessarily lead to impairment of auditors' independence. Secondly, we find that the enactment of Class Action Law mitigates the extent of deterioration of auditors' independence generated by abnormal (non-) audit fees. Specifically, we find that as the level of abnormal non-audit fees increases, the level of conditional conservatism of client firms also increases. This finding is consistent with heightened litigation risk on the part of external auditors forcing auditors to be more conservative when they are overpaid for non-audit services. It confirms the positive effects of the Class Action Law on auditors' independence. We believe that our findings provide insight to practitioners, policy-makers, and academicians.