잠재적 소송위험과 지배회사·종속회사의 감사인 일치성

The audit risk can be decreased by auditor conformity between the parent and subsidiary company due to auditor's control, consistency of accounting method, adjustment of fiscal year and consistency of reporting currency. On the other hand, the audit risk can be increased by auditor conformity between the parent and subsidiary company due to economic ties of auditors. Meanwhile, when companies recognize that they are faced with potential litigation risk or have a strong incentive to avoid potential litigation risk, they can consider the systematic audit method to reduce the audit risk. So this study empirically examined the effect of the potential lawsuit risk on auditor conformity between the parent and subsidiary company. Specifically, it is hypothesized that the higher the potential litigation risk of company is, the greater likelihood the auditor conformity between the parent and subsidiary company is. Prior literature use total assets of subsidiaries or total sales of subsidiaries as measures of detecting auditor conformity between the parent and subsidiary company. But in this study, we use one to one match sample selection method for detecting auditor conformity between the parent and subsidiary company. The sample consists of non-banking firms(320 firm-years) with a December fiscal year-end listed on the Korean Stock Exchange from 2004 to 2008. Consistent with the prediction, there is significant positive association between the potential lawsuit risk and the auditor conformity between the parent and subsidiary company. This shows that firms faced with potential litigation risk or having intention to avoid potential litigation risk have a strong incentive to appoint to the same auditor between the parent and subsidiary company. And this result is more significant for the subsidiary company than the parent company and after the enactment of the Securities Class Actions in 2007. Also these results are consistent in the sensitivity analysis.