The effect of mandatory auditor assignment and non-audit service on audit fees: Evidence from Korea |
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Authors: | Seok Woo Jeong Kyueon Jung Suk-Jun Lee |
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Institution: | a College of Business Administration, Korea University, Seoul 136-701, Korea b College of Economics and Commerce, Korea University, Iochiwon-eup, Chungcheongnam-do 339-700, Korea c Samsung Economic Research Institute, Yongsan-ku, Seoul 140-702, Korea |
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Abstract: | In Korea, regulators could assign auditors to firms. We investigate the relationship among audit fees, mandatory auditor assignment, and the joint provision of non-audit and auditor services in Korea. We find that assigned auditors charge significantly higher audit fees than freely selected auditors. We also find that the joint provision of non-audit and audit services does intensify the relation between auditor assignment and audit fees. Combined with the results of other studies that have shown that firms audited by assigned auditors report smaller amounts of discretionary accruals than firms audited by freely selected auditors, our results suggest the possibility that mandatory auditor assignment may improve auditor independence. |
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Keywords: | Audit fee Auditor assignment Joint provision of non-audit and audit services |
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