감사시장 집중도와 감사품질

Audit Market Concentration and Audit Quality : Focused on the Biggest Industry-Market-Share Auditors

본 연구는 감사시장 집중도가 감사품질에 미치는 영향을 산업별 시장점유 1위 감사인을 중심으로 분석하였다. 산업별 시장점유 1위 감사인은 산업전문성을 가진 감사인으로 가정되지만 시장점유를 상실할 경우에 잃게 되는 혜택이 크기 때문에 시장점유의 상실을 우려하여 감사품질의 하락을 감수할 유인을 가질 수 있으며, 그 유인은 감사업무를 수행하는 오피스의 수효가 적은 시장에서 집중도가 클수록 증가할 수 있다. 감사시장 집중도는 허핀달 지수를, 감사품질은 성과조정 재량적 발생액의 절댓값을 이용하였다. 자료는 1996년부터 2013년까지 18년간 유가증권 및 코스닥 시장 상장기업 중 금융업을 제외한 12월 결산법인을 표본으로 18,407 기업-연도를 분석하였다. 실증분석 결과, 시장점유 1위 감사인의 감사품질은 다른 감사인보다 낮았으며, 감사시장 집중도가 높아질수록 시장점유 1위 감사인의 감사품질이 하락하였다. 이 현상은 전체표본기업에서는 물론 Big 4 감사인의 감사기업에 대하여도 유사하게 나타났으며, 국내 감사시장이 정상적인 시장원리에 따라 작동되지 아니하고 있음을 시사한다. Big 4 감사인은 총 4개의 오피스가 경쟁하면서 국내에서 모든 산업을 감사하므로 시장점유 1위 감사인은 산업전문성으로 감사품질을 높이기에 앞서 시장점유 상실을 우려한다. 선행연구에서는 국내감사시장에서 감사시장 집중도가 높아지면 감사인이 나태하고 안주하게 되어 감사품질이 저하된다고 보았으나, 본 연구에서는 시장점유 1위 감사인이 시장점유 상실을 우려하여 감사보수의 실질적인 인하와 감사품질 저하를 감내한다고 예상하였고 실증하였다. 본 연구는 국내에서 지속적으로 제기되는 감사품질에 관한 문제의 원인을 새로운 가설에 의하여 밝히는 점에서 의미를 갖는다.

Policy makers have expressed concern about the risk posed by the auditor concentration. In this paper, we examine whether concentration in Korean audit market affects the auditor s tolerance for earnings management by audit clients. Auditor concentration could result in a more lenient and less skeptical approach to audits, and accordingly lower audit service quality. Concentration also could have a beneficial effect on audit quality due to reduced fear of being replaced by a more compliant auditor. Some prior studies suggest a positive association between audit quality and concentration while the others, including a recent Korean study, indicate a negative association. Hence, the relation between auditor concentration and audit quality remains an empirical question. The results of previous empirical studies on differential audit quality of Big 4 auditors and industry specialized auditors are mixed in Korea. Accounting scandals have repeated in spite of the internationally recognized Big 4 auditors operating in Korea. Demand for enhancement of audit quality in Korea has also continued. In Korea, each Big 4 auditor has one engagement office; four engagement offices of Big 4 auditors cover the entire country; the biggest market share auditor is outstandingly notable; and auditor concentration by industry is varying. Concentration could have more negative effect to the biggest industry market share auditors on audit quality due to the fear of loosing market share in Korea. To examine the effects of audit market concentration on audit quality in Korea, we focus on the biggest market share auditor by industry. This paper investigates whether the biggest industry market share auditors are associated with audit quality in connection with the degree of concentration by industry. Our sample covers the 1996-2013 time period and consists of 18,407 firm-year observations. We also examine a sample of 9,936 firm-year observations where the clients are audited by Big 4 auditors. Following prior studies, we use accrual-based earnings quality as a proxy for audit quality. Our primary measure is absolute value of performance matched discretionary accruals by Kothari et al. (2005). Our results indicate that higher concentration (as measured by the Herfindahl index) is associated with the likelihood of the client having higher absolute value of performance matched discretionary accruals, only if the auditor is the biggest market share auditor by industry. We are unable to detect a relation between auditor concentration and audit quality in Korean audit market, which is different from the previous study. This implies that auditor concentration itself does not have an effect on audit quality. Instead, audit quality of the biggest market share auditor by industry is lower than quality of the other auditors. As a matter of primary interest, audit quality of the biggest industry market share auditor becomes lower as the auditor concentration by industry becomes higher. Our results hold across alternative measure of Herfindahl index based on sales as well as on total assets. Specifically, audit quality is lower as auditor concentration becomes higher, but only for firms audited by the biggest market share auditors. In the absence of stricter investor protection, the biggest market share auditors simply do not have incentives to enforce high quality earnings and risk dismissal by their client in Korea. Thus our findings refute the view audit quality of the biggest market share auditors is higher as a industry specialist auditors. Our results also hold across the sample clients audited by Big 4 auditors. This paper explains why audit quality of the big size auditors and industry specialized auditors are not higher than audit quality of other auditors in Korea. The biggest market share auditor by industry is unable to provide higher quality audit due to the fear of loosing market share in Korea.