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korean management review - Vol. 53 , No. 2

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[ Article ]
korean management review - Vol. 53, No. 2, pp. 429-464
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 30 Apr 2024
Received 15 Nov 2023 Revised 09 Feb 2024 Accepted 19 Feb 2024
DOI: https://doi.org/10.17287/kmr.2024.53.2.429
The Effect of Periodic Auditor Designation on Rank-Specific Audit Hours
Hyeonjung Kim ; Seung Weon Yoo
(First Author) Researcher, Ph.d., Korea University Business School Institute for Business Research and Education (hyeonj24@korea.ac.kr))
(Corresponding Author) Professor, Korea University Business School (acyoo@korea.ac.kr))
주기적 감사인 지정이 직급별 감사시간에 미치는 영향

Copyright 2024 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 cited.

Abstract

This study investigates the effect of periodic auditor designation on changes in rank-specific audit hours. Despite the increase in audit fees and audit hours caused by introducing the periodic auditor designation system, previous studies showed that there is no significant effect on the improvement of audit quality. This study confirms the effectiveness of the periodic auditor designation system, as verifying the change in audit hours for partner, senior and associate auditors, respectively. The results of the analysis which compares the changes of audit hours between designated and non-designated firms in 2020 are as follows. First, after implementing the periodic auditor designation, the increase of partner and senior auditor audit hours to designated firms was empirically greater than that of non-designated firms. Second, the auditor of designated firms showed an increase in senior-level audit hours under BIG4 auditor, while the increase in partner-level audit hours was mainly noticeable in small and medium-sized auditors. Finally, specialist auditors have shown a notable increase in senior auditor audit hours for designated firms, whereas for non-specialists, an increase in partners auditor audit hours is more pronounced.

Acknowledgments

This article has been revised from the first author's doctoral dissertation submitted to Korea University Business School. We extend our sincere gratitude to the members of the dissertation committee for their insightful feedback and guidance.

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∙ The author Hyeonjung Kim is a PhD. researcher at Institute for Business Research and Education of Korea University Business School. Her research focuses on the auditing, capital market and the quality of financial reporting.

∙ The author Seung Weon Yoo is a professor at Korea University Business School. His research focuses on the earnings forecast, analysts’ behavior, auditing and managerial incentives and corporate governance.