감사인 지정여부와 보수주의의 관련성

This study examines the effect of auditor designation on accounting conservatism. Auditor designation is the system that Securities & Futures Commission designates the external auditor of the firms that have the possibility to commit accounting fraud and need to be audited fairly in the respect of social ripple effect on the basis of the ‘act on external audit of stock companies’. So, capital market participants tend to respond more sensitively to reliability of accounting information of auditor-designated firms than auditor-appointed firms because auditor-designated firms have the high information risk and agency problem caused by information asymmetry. In the other side, designated auditors have tendency to be more conservative to future uncertainty of firms because they tend to be more risk-averse and independent than free appointed auditors. Accounting conservatism is the asymmetrical verification requirements for gains and losses(Basu 1997). Conservative accounting is a means of addressing moral hazard caused by parties to the firm having asymmetric information, asymmetric payoffs, limited horizons, and limited liability. Conservatism is very efficient to address the problem of contracting, shareholder litigation, taxation, and accounting regulation(Watts 2003). So, conservatism contributes to reduce information risk and to enhance reliability of accounting. In this context, we make inferences that auditor-designated firms are different from auditor-appointed firms in respect of the degree of auditor independence and risk-averse attitude, and also in respect of the level of accounting conservatism. Four different hypotheses are established on the basis of the prior research concerning auditor designation and accounting conservatism. Research models used in this study are the revised Basu’s earnings change model(1997) and the revised Ball and Shivakumar’s accrual model(2005). As follows are regression results from a sample of 11,092 firm-years listed in Korea Exchange between 2001 and 2011. First, it shows that the first hypothesis that an auditor-designated firm is more conservative than an auditor-appointed firm is supported in both research models. It means that a designated auditor strengthens conservatism because his strong independence leads to the risk averse attitude toward litigation risk resulted from audit failure. Second, it shows that the second hypothesis that in case of a sample of auditor- designated firm, an auditor-designated fiscal year is more conservative than a previous one is supported in both research models. It seems that this result is caused by two reasons. One is the strong risk-averse attitude of a designated auditor, and the other is exposure to capital market and regulatory authority of hidden business risk and uncertainty. Third, it shows that the third hypothesis that in case of a sample of auditor-designated firm, an auditor-designated fiscal year is more conservative than a following one is supported in both research models. It means that the change from a designated auditor to an appointed auditor decreases auditor’s independence, and auditor designation reduces business risk and uncertainty. Finally, it shows that the fourth hypothesis that in case of a sample of auditor-designated firm, a following auditor-designated fiscal year is more conservative than a previous one is supported in both research models. It means that the effect of auditor designation continues to a following auditor-designated fiscal year though an auditor is not designated but appointed in both years. Overall, the results of this study expand possibility of research areas of auditor designation and accounting conservatism, and contribute to enhance the understanding of auditor, regulator concerning these topics.