경영자 능력과 감사인의 산업전문성

In this study, we investigate whether auditor selection is differentiated according to manager's ability. According to previous studies, able managers not only have a good understanding of their business but also have less incentive to pursue opportunistic proprietary interests due to their high reputation. Thus, high managerial ability will decrease the agency problem between manager and shareholders. Based on this theory, we first predict that the higher the managerial ability, the less likely it is to appoint a premium industry specialist auditor(ISA). Moreover, prior study shows that independent board has incentive to approve the industry specialist auditor to decrease agency problem in auditor selection process. Thus, we also investigate whether the relationship between the managerial ability and the auditor selection differed according to the board independence. The empirical results show that there exits a significantly negative relationship between the managerial ability and the possibility of appointing the industry specialist auditor. Next, when managerial ability is low, the higher the independence of the board, the more likely appointing ISA. However, this result is partially supported. Thus, this study contributes to extend the prior auditor selection literature by analyzing the effects of managerial characteristics on the selection of external auditors and by showing the importance of independent board.