The Impact of External Directors with Multiple Directorships on Audit Fees and Hours

[Purpose]This study empirically analyzed the effect of external directors with multiple directorships on audit fees and hours. It sought to confirm whether corporate governance changes and audit risk reduces based on the ratio of external directors with multiple directorships. [Methodology]From 2015 to 2019, several analyses were conducted on 2,552 firm－year data. An average difference analysis was performed based on the presence or absence of external directors with multiple directorships. An ordinary least squares (OLS) analysis was conducted using the number and ratio of external directors with multiple directorships. [Findings]The number of external directors with multiple directorships was not significantly related to audit quality. However, an increase in the proportion of external directors with multiple directorships was significantly negatively related to audit fees and hours. [Implications]This study is meaningful as it offers insights on new characteristics of directors and examines a situation that has not been examined before. Holding multiple directorships can be considered a new criterion in appointing external directors in the future, as it has been confirmed that external directors with multiple directorships can have a significant impact on the governance structure and reduce audit risk.