회계법인의 수로 측정한 감사시장의 경쟁수준과 감사품질 사이의 관계

This study investigates the association between the number of auditors and audit quality. We use the number of auditors as a proxy for audit market competition, an issue which regulators worldwide have identified as being a great concern. Specifically, regulators have raised a concern about the possibility that the lack of genuine competition in the current audit market may lead to poor audit quality. However, practitioners do not share this view and argue that the level of competition in the current audit market is very high. To resolve this controversy, we investigate the association using a sample of Korean listed firms collected over the period from 2002 to 2016. The empirical results reveal that the number of auditors in each year-industry is negatively associated with audit quality, measured by the absolute value of discretionary accruals and accrual quality. Additionally, we find that the decline in audit quality is more pronounced for the clients of non-Big N auditors than for those of Big N auditors. We also find that the negative association between the number of auditors and audit quality is less pronounced in industries with a greater number of client firms. In sum, our findings provide regulators with valuable insight into the effect of audit market competition on audit quality.