감사인 교체 시점에서 감사시장의 집중도가 감사보수에 미치는 영향

This study investigates the effect of interaction between audit market concentration and voluntary auditor change on audit fees. Regulators worldwide have high concern on the potential detrimental effect of the dominance of a few large auditors, which results in the concentrated audit market structure. They worry that the concentrated market structure may enable auditors to charge excessive fees, while providing low-quality audit service. However, many practitioners do not agree with this view. Studies also suggest that economy of scale occurs at the concentrated audit market, which enables auditors to lower audit costs. Prior studies in Korea document that audit fees drop as audit market concentration increases. We focus on the auditor change because the competition among auditors at the time of the auditor change to attract the new clients is known to be very intense, which frequently results in initial audit fee discount. The intense competition may influence the potential effect of audit market concentration. Empirically, we find that the negative association between audit market concentration and fees is more salient at the initial engagement year of a new auditor. The result suggests that efficiency gains by auditors in the concentrated audit market are passed to clients when the level of competition is intense. Our findings provide interesting policy implications to regulators on the role of audit market concentration.