파트너 감사시간과 자기자본비용의 관련성

[Purpose]This study investigates the effect of the ratio of partner audit hours to total audit hours on the cost of equity capital. [Methodology]This study conducts regression analysis using non－financial Korean firms listed on the KOSPI market and audited by BIG4 auditors from 2014 to 2020. [Findings]We find that the higher the ratio of partner audit hours to total audit hours, the lower the cost of equity capital. This suggests that investors place more trust in the financial reporting of companies where the audit partners put in greater audit efforts, and consequently assess their investment risk low. Meanwhile, since the implementation of the standard audit hours policy in 2019, there has been no significant association between the ratio of audit hours and the cost of equity. This indicates that as the standard audit hours policy structurally requires auditors to increase the partner audit hours, the implication of the partner audit hours information provided to investors has been weakened compared to the period in which it was voluntarily determined. [Policy Implications]This study expands the related research by examining how the audit partner who is in charge of auditing affects the investor’s evaluation of the audited company’s financial reporting credibility and risk. In addition, this study presents empirical evidence indicating that the standard audit hours policy is achieving one of the objectives of the introduction, which is to increase the input hours of skilled audit personnel.