법적 체계의 국가별 차이가 계속감사기간과 감사품질의 관계에 미치는 영향

Prior studies have suggested that the level of investor protection across countries varies depending on legal systems. However, there has been lack of empirical studies on how to reduce lower earnings quality problems in weak legal system countries. This study investigates whether auditor tenure can mitigate the earnings quality weakness in countries with legal systems using data from 29 countries from 2003 to 2014. With extended auditor tenure, auditors could gain higher understanding of clients’ business and audit risk and may mitigate lower earnings quality in poor legal system countries. However, longer auditor tenure may impair auditor independence through economic bonding with the client and may make earnings quality worse in poor legal system countries. I find that the association between the lower audit quality and the weak legal system is weaker for the firms with longer auditor tenure. These results support an expertise argument in which auditors can understand clients’ industries and business better with longer auditor tenure and lead to higher earnings quality despite of auditor independence concern with long auditor-client relation. Overall, the results suggest that the countries with weak legal system can benefit from extended auditor tenure more than countries with strong legal systems. This study contributes to the auditor tenure literature by providing empirical results of audit tenure effect on earnings quality depending on legal systems. This result suggest that regulators in weak legal system countries need to consider auditor tenure’s expertise effect when they make legal rules affecting auditor tenure such as mandatory auditor rotation policy.