손유정 교수

SUMMARY Despite regulatory concerns over opinion shopping (OS) behavior, there exists little systematic evidence on the prevalence and consequences of OS to avoid a going concern opinion (GCO). Using Lennox's (2000) framework to identify OS, we find that distressed firms successfully engage in OS to avoid a GCO. Moreover, clients engaging in OS exhibit a higher ex post Type II error rate in audit opinions than clients that do not, and the higher Type II error rate is salient for clients switchin

This paper investigates whether the downward pressure on audit fees during crisis affects the audit fee structure. The empirical results reveal the following: First, audit fees dropped significantly during the financial crisis period. Second, auditors respond differently to small clients and risky clients when facing downward pressure on audit fees. Finally, the above mentioned findings are more pronounced when the client is under high pressure to reduce expenses. Collectively, the above results

This paper investigates the relation between the length of an audit partner’s experience as a certified public accountant and audit quality. Audit quality is measured by the magnitude of discretionary accruals and tendency to meet or miss earnings benchmarks of the client firms. This paper documents that an audit partner’s experience is positively associated with audit quality and the association is more salient among non-Big 4 auditors. These findings suggest that auditors’ knowledge and expert

Using the unique reporting environment in Korea, this study investigates the determinants of human resource investment in internal controls for 1352 listed firms disclosing the number of personnel who are in charge of internal control-related tasks (IC personnel) from 2005 to 2008. We find that the number of IC personnel within a firm and several key departments increase with firm size, number of employees, complexity and for Chaebols, and decrease in rapidly growing firms. Additional analysis r

This study analyzes how the separation of corporate ownership and control affects financial reporting conservatism using unique data on Korean chaebol-affiliated firms. The presence of severe agency problems generated by the wedge between ownership and control may increase the demand for conservatism, while the greater managerial motivation and latitude in making accounting choices borne by the entrenchment problems can adversely affect the degree of financial reporting conservatism. We find tha

Several studies provide evidence that auditors play an important role in the implementation of accounting comparability. We extend this line of research by examining whether comparability in accounting earnings between two firms is affected by auditor industry expertise measured at the partner level. Using 45,741 pairs of firms over the period 2003–2016, we find that the accounting comparability between two firms in a pair is higher when they are audited by the same expert partner than when they

Despite regulatory concerns over opinion shopping (OS) behavior, there exists little systematic evidence on the prevalence and consequences of OS to avoid a going concern opinion (GCO) in today’s audit environment. Using 11,628 distressed sample firms over the period 2004–2012 and Lennox’s (2000) framework to identify OS, we find that distressed firms successfully engage in OS to avoid a GCO. Moreover, clients engaging in OS exhibit a higher ex post Type II error rate in audit opinions than clie

This study investigates whether the tendency for audit clients to engage in opinion shopping becomes weaker after the enforcement of the Sarbanes-Oxley Act (SOX). While Lennox (2000) provides evidence that U.K. firms successfully engage in opinion shopping, there is limited evidence on the mitigating effect of SOX on opinion shopping. Using observations collected from the period before and after the enforcement of SOX (year 2001, 2004 and 2005), we find that, for our sample period, firms are lik

This study examines whether good accruals quality is associated with less disagreement among credit rating agencies. Distinct from prior studies that focus on equity analysts, I examine how the quality of financial information influences rating agencies in determining bond ratings. Precise accounting information reduces the information risk of the users of the financial statements such as the credit rating agencies, and thereby affects the frequency and magnitude of split bond ratings by credit

This study examines the effect of corporate governance on audit fees and audit hours during the financial crisis and pre-crisis periods. While the literature on the effect of corporate governance on audit fees is replete, the results are still mixed. By exploiting the crisis setting which represents exogenous shock unrelated to governance choices or auditing, we find that firms with strong corporate governance pay significantly higher audit fees and purchase additional audit hours. We also find