This study investigated via game-theoretic modeling how changes in audit environment after the Korean economic crisis may have affected the practice of accounting fraud and auditor independence. This study regarded the situation prior to the economic crisis as the one in which auditee companies, purchasing audit services of very low quality at a minimum audit fee, had committed accounting fraud, and external auditors had intentionally overlooked such fraud. The situation similar to this has been shown to exist as an equilibrium in this study; Such equilibrium generally exists under the conditions that the level of social monitoring against accounting fraud is minimal, and/or that the penalties to be imposed upon auditees and auditors for their misbehaviors are not sufficient enough. Such equilibrium is also characterized by the least accounting transparency and the maximum Korea discount in the stock market. Further, this study showed that due to the intensified social monitoring and increased penalties borne by auditees and auditors after the economic crisis, it is highly likely that the capital market had moved toward a better equilibrium, in which accounting fraud had been mitigated, and auditor independence enhanced. This suggests that audit service now is more than the mere legal fulfillment required of public companies; rather it serves as an information intermediary that can influence firm valuation, thereby increasing transparency and reducing Korea discount in the post-economic-crisis capital market.