감사시장의 경쟁과 감사의견구매

Auditor change for opinion shopping(OS) purpose occurs when firms dismiss incumbent auditors and hire new auditors that are more likely to issue a clean audit opinion. This change is a symptom of the impaired audit quality for successor auditors, and worldwide regulators have devised a way to prevent firms from engaging in OS. This study investigates whether audit market competition affects firms’ opportunistic auditor choices. There are two conflicting predictions on the OS effect of audit market competition. On the one hand, auditors that obtain greater bargaining power over client firms in less competitive audit market are more likely to maintain the independence and reject OS clients. Thus, we predict the lower audit market competition, the less OS-driven auditor changes. On the other hand, if auditors remain complacent with their oligopolistic power in less competitive audit market, audit quality can be deteriorated. Then, we expect that low audit market competition can encourage OS-driven auditor changes. Our findings using Korean data support the former prediction that auditors in low audit market competition are less likely to accept OS clients. We also find that the role of audit market competition in deterring firms’ OS attempts is observed in firms audited by Big 4 auditors as well as those audited by non-Big 4. These findings provide important implications for worldwide regulators to improve audit quality and support the Korean regulator’s policy to increase the size of auditors.