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korean management review - Vol. 50, No. 3

[ Article ]
korean management review - Vol. 50, No. 3, pp.611-641
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 30 Jun 2021
Received 09 Sep 2020 Revised 31 Dec 2020 Accepted 05 Jan 2021

The Relation between CEO Turnover and Auditor Switch: Which Quality of Audits Do the Incoming CEOs Prefer?
Jeong-taek Kim
(First Author) Ph.D. Candidate, Korea University (

CEO 변경과 감사인 교체의 관계: 신임 CEO는 어떤 품질의 감사를 선호하는가?

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 cited.


This study investigates how the change of top management(CEO) affects the auditor choice and audit quality, and whether the corporate governance of the audited company makes a difference in these aspects. Despite the fact that a change of CEO who can exert influence on the auditor appointment process likely has a significant impact on auditor choice, studies on the specific aspects of the impact have been rare. The findings of this study are as follows. First, CEO turnover has positive association with auditor switch in the subsequent year. Second, when CEO turnover occurs, the incumbent auditor who puts in more audit efforts is more likely to be fired. Further, a new auditor’s efforts tend to decrease when the auditor is appointed immediately after the CEO turnover. This can be collectively interpreted as the incoming CEOs prefer low-quality audits on average. Third, the client company’s corporate governance appears not to suppress the incoming CEO’s preference for low-quality audits, suggesting that Korean companies' governance is not effective enough at least with regard to the external auditor choice. Overall, this study provides empirical evidence supporting recent policies focused on enhancing auditors’ independence against CEOs.

Keywords: CEO turnover, Auditor switch, Corporate governance

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∙ The author Kim Jeong-taek is currently attending the Ph.D. in Accounting at Korea University Business School. He received a bachelor's degree from Seoul National University's college of business administration and a master's degree from the same graduate school. His research interests include corporate governance, auditing, and disclosure.