The Effect of Communication between Those Charged with Governance and External Auditors on Foreign Ownership

Hyun Uk Jung ; Sun Young Byun

(First Author)Dong-A University, Department of Business Administration biglotos@dau.ac.kr
(Corresponding Author)Dong-A University, Department of International Trade byeunsy@dau.ac.kr

지배기구와 외부감사인 간의 커뮤니케이션이 외국인지분율에 미치는 영향

정현욱 ; 변선영

(주저자)동아대학교 경영학과
(교신저자)동아대학교 국제무역학과

Copyright 2025 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly ited.

Abstract

We test the effect of communication between those charged with governance and external auditors on foreign ownership. We establish two hypotheses based on research results showing that domestic foreign investors prefer high audit quality when selecting investment companies. The test results show that the number of communications between the internal audit organization and external auditors have a positive relationship with foreign ownership. The number of communications between internal auditors and external auditors is found to further increase the positive relationship between audit quality and foreign ownership. We divide communication into face-to-face and non-face-to-face and additionally tested how each communication method is related to foreign ownership. This study is expected to have policy implications in that it presents the results that disclosure about communication between those charged with governance and external auditors has an effect on those charged with governance. In other words, this study is expected to have a contribution in that it presents empirical data showing that the introduction of the ‘Revised External Audit Law’ can change the governance structure.

Keywords:

Those Charged with Governance, External Auditor, Foreign Ownership, Internal Audit Organization, Audit Quality

Acknowledgments

This work is supported by the Dong-A University Research fund.

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∙The author Hyun Uk Jung is currently an associate professor in the Department of Business Administration (Accounting) at Dong-A University Business School. I received my bachelor's, master's and doctoral degrees from Yeungnam University. I am majoring in Financial Accounting, and I am currently conducting research related to corporate governance and capital markets.

∙The author Sun Young Byun is currently an associate professor in the Department of International Trade at Dong-A University Business School. In the international Business, CSR and ESG are detailed majors.