This study investigates embezzlement cases in Korean-listed firms and examines the auditor’s role in the quality of disclosed accounting information. Embezzlement increases the risk of financial misstatements, harming capital market participants. While the primary responsibility lies with the company, auditors may also contribute to the lack of transparency. This study analyzes the self-contagion effect—whether auditors who provide low-quality audits to embezzling firms also deliver similarly low-quality audits to other firms they serve concurrently, particularly within the same industry. The findings suggest that audit quality deteriorates across firms sharing the same auditor, especially when embezzlement is not properly detected, indicating consistent low audit performance. This highlights the auditor’s systemic influence on financial reporting quality. The study contributes to the literature by focusing on asset embezzlement—a significant issue in Korea—and by shedding light on the underexplored concept of auditor self-contagion. Additionally, the analysis was refined by distinguishing between the embezzlement’s occurrence and disclosure dates, identifying whether the perpetrator was a manager or employee, and considering the scale of the embezzlement. These methodological enhancements strengthen the study's robustness and implications for audit accountability in emerging markets.