기업지배구조와 감사인의 지배구조와의 커뮤니케이션 횟수가 감사시간에 미치는 영향: 직급별 감사시간을 중심으로

This study investigates whether the effect corporate governance (hereafter GOV) and the number of auditor’s communications with governance (GCOM) on the rank-specific audit hours. We also examine whether the effect of the interaction between GOV and GCOM on the rank-specific audit hours. In addition, we examine whether the effect of the interaction between GOV and BIG4 with the external auditors on the rank-specific audit hours, and the interaction between GCOM and BIG4 on the rank-specific audit hours. Prior research has documented that a positive relationship between corporate governance and total audit hours (i.e., Choi and Yang 2008; Kim and Kim 2012). Thus, we extend and complement this line of p rior research by p roviding new evidence, and we will exp lore these issues in more detail, systematic evidence suggesting that auditors consider corporate governance mechanism in their audit planning and audit practices with the rank-specific audit hours. Our study therefore contributes to and extends the literature on audit hours, corporate governance, and auditor’s communications with governance. For analysis, we use the GOV and ESG (environment, social, and governance) grade data produced by the Korean Corporate Governance Service (KCGS) as a proxy for corporate governance. Following Kim and Jeon (2016), we use five positions with the rank-specific audit hours (e.g., the quality control reviewer (hereafter AH_Q), business management director (AH_P), registered certified public accountant (AH_A), probation certified public accountant (AH_J), experts with the computerized audit, tax, valuation (AH_C)) and total audit hours, and we collect the number of auditor’s communications with governance (GCOM) as disclosed in the audit report. The sample for our analysis is based on disclosed rank-rank-sp ecific audit hours and KCGS data from 2014 to 2019, our final samp le is 3,848 firm-year observations with publicly traded companies in Korea stock exchange. Our main findings are summarized as follows. First, we find that a significantly positive relationship between GOV and rank-specific audit hours (except for AH_Q) as well as total audit hours. The results indicate that firms with good corporate governance are rank-specific auditors expend more audit effort. Second, we find that a significantly p ositive relationship between GCOM and rank-sp ecific audit hours as well as total audit hours. The results imply that more the frequency of the number of auditor’s communications with governance are rank-specific auditors expend more audit effort. Third, we also find that the interaction between GOV and GCOM is positively related to the rank-specific audit hours (except for AH_Q and AH_C) as well as total audit hours. The results shows that the effect of the interaction between GOV and GCOM are rank-specific auditors expend more audit effort. Our results obtain qualitatively similar when using ESG grade data. Moreover, our main results is driven by Big 4 auditors rather than non-Big 4 auditors. Finally, in additional tests, we find that the interactions between GOV and BIG4, and also the interactions between GCOM and BIG4 are positively related to the rank-specific audit hours as well as total audit hours, resp ectively. These result shows that the effect of Big 4 auditors link between GOV and GCOM are more likely to increase audit effort. Overall, our findings suggest that corporate governance (or ESG) data and the number of auditor’s communications with governance are positively related with the rank-specific audit hours and total audit hours. Moreover, our results shows that higher-quality corporate governance mechanisms by joint-auditor’s communications with governance lead to increasing auditors expend more audit effort. Therefore, these novel evidence suggests that our findings contributes to the prior literature by considering auditors’ response to corporate governance mechanisms. Specially, our findings contributes to the rank-specific audit hours-related literature. Furthermore, our findings should also provide some evidence to audit regulators that the better corporate governance mechanisms and auditor’s communications with governance, and their interactions incorporates more audit effort in the rank-specific audit hours.