2019년 발생한 중소형 회계법인의 합병이 감사시장에 미친 영향

Due to Korean regulators’ policy to promote the enlargement of audit firm size, many small and medium-sized Korean audit firms merged in 2019. We identify 17 mergers that took place during this year. Using a difference-in-differences approach, this study examines how these mergers affected the audit market by comparing a three-year period before the mergers to a three-year period after the mergers. Our findings indicate that audit fees and audit hours increased across all audit firms during the post-merger period. This trend appears to be driven by the implementation of various accounting reform policies aimed at enhancing financial transparency rather than the mergers themselves. When comparing merged firms to other non-Big 4 audit firms that did not undergo mergers, we find no evidence that the merged firms experienced a significantly greater increase in audit fees and audit hours. In contrast, we do observe that the merged firms significantly increased their market share in the post-merger period. The finding suggests that these merged audit firms increased their presence or reputation in the audit market and thus started to attract more new clients as a result of the mergers. This study empirically examines how mergers of small and mid-sized audit firms affect the audit market and yields policy-relevant insights for regulators