감사파트너 경험에 따른 감사시간·감사보수 및 감사품질의 차이

According to recommendations of the Advisory Committee on the Auditing Profession(ACAP 2008), the PCAOB(2011) released a concept statement, which would consider to require public disclosure of audit partner names. The regulator explains that partner identity disclosure would increase transparency and accountability of the audits, which would eventually improve audit quality(PCAOB 2011). In a sense of transparency, the regulator indicates that partner identity would help the investors and audit committee to evaluate the potential audit partners by enabling them to find the partner’s competence, experience, or disciplinary history. This is in line with the thoughts that individual partner characteristics would have differential effects on audit partner’s behaviors and, ultimately, audit quality. In response to such a new development, academic literature also push down its research focus from audit firm levels and office levels to the individual partner level. Conventional audit firm level studies have examined various audit firm characteristics, such as audit firm size(e.g. DeAngelo 1981; Becker et al. 1998; Krishnan and Schauer 2000), industry specialists(e.g. DeFond et al. 2000; Balsam et al. 2003), audit firm tenure or audit firm rotations(e.g. Lim 2006; Rho 2009), audit firm independence and non-audit services(e.g. Craswell et al. 2002; Myers et al. 2003). They investigate the relations between the audit firm characteristics or the audit firm client characteristics and engagement level audit attributes such as audit quality, audit hours or audit fees. More recent office level studies have examined the effect of office size and office level industry expertise on audit quality(e.g. Ferguson et al. 2003; Francis and Yu 2009; Francis et al. 2013). More nascent individual partner level studies have examined audit partner tenure or partner rotation(Carey and Simnett 2006; Manry et al. 2008; Fargher et al. 2008; Chen et al. 2008; Azizkhani et al. 2013), audit partner’s industry expertise(Chi and Chin 2011; Zerni 2012), auditor independence at the individual partner level(Chen et al. 2010; Ye et al. 2011), fixed effects of audit quality across individual audit partners(Gul et al. 2013; Sundgren and Svanström 2014), and effects of potential disclosure of partner identity(Carcello and Li 2013; Abodia et al. 2013; King et al. 2012) on audit quality. They generally find that individual partner characteristics are systematically related to audit quality and other audit attributes. Our study adds to the existing literature by examining the effect of various audit partner’s experiences and auditor behavior on audit results. Specifically, auditor behavior is measured by audit hours, audit fees, and audit fee premium/discounts. Audit quality is measured by restatements and the absolute value of performance-matched discretionary accruals(AbsPMDA). Audit partners’ experience is proxied by (i) the number of public company audits, (ii) the number of career years as professional certified public accountants(CPA), (iii) the number of partner tenure years with the client. In particular, we examine whether the partner experience proxies are related to audit hours, audit fees, audit fee premium/discounts, restatements and AbsPMDA. Our sample consists of 7,167 firm-years from 2006 to 2012 . The results indicate that audit partner experience is systematically related to audit hours, audit fees, and audit quality. First, the number of public company audits is negatively associated with audit hours and audit fee. Audit quality is positively associated with the number of public company clients, although the significance level is generally low. However, the number of prior three year public company audits is not systematically associated with audit hours, audit fee, and audit quality. Second, audit partner career as a CPA is negatively associated with audit hours and audit fees and AbsPMDA. However, we find no systematic relationship between audit partner career and restatements. Third, audit partner tenure has no significant association with audit hours, audit fees, restatements, and AbsPMDA. Audit partner tenure is negatively associated with AbsPMDA at the 0.1 level in the non-Big 4 audit firm subsample, but not in the Big 4 audit firm subsample. However, audit firm tenure is positively associated with audit hours and audit fees. We find that audit firm tenure is positively related to audit fee premiums, but not related to restatements and AbsPMDA. We perform several sensitivity tests. First, converting experimental variables to corresponding dummy variables does not alter the results. Dividing the observations into Big 4 and non-Big 4 subsamples reveals that auditor behavior and audit quality are not constant across these subsamples. More specifically, Big 4 audit firms appear to have a more structured quality control system to mitigate quality differences across individual partners and better utilize partner experience by more effectively transferring their knowledge to less-experienced professionals. Our work has several contributions. First, we extend the existing literature in auditing by extending the scope of the analysis to audit partners. Second, we provide evidence that audit partner experience is systematically related to auditor behavior and audit quality at the engagement level. Third, given the debate on the effect of potential partner identity disclosure in several countries including the U.S. and the EU, our work provides regulatory implications for the potential regulatory changes.