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http://dx.doi.org/10.5392/JKCA.2020.20.01.427

The Effect of the Characteristics of an Audit Committee on the Association between Audit Market Concentration and Audit Quality  

Song, Bomi (가천대학교 경영대학)
Publication Information
The Journal of the Korea Contents Association / v.20, no.1, 2020 , pp. 427-436 More about this Journal
Abstract
Prior literature shows that audit market concentration which is measured as the Herfindahl index is negatively associated with audit quality in Korea. This study analyzes whether characteristics of an audit committee have effect on the relation between audit market concentration and audit quality. This is because it is expected that effective audit committees restrict the tendency of dominant auditors to neglect their duties. The empirical results of this study using the sample firms having an audit committee listed in the Korea Composite Stock Price Index market for 2006-2015 are summarized as follows. First, consistent with prior research, audit quality decreases as audit market concentration increases. However, audit quality is not lowered as audit market concentration rises only when the audit committee has financial expertise among representative characteristics of an audit committee - independence, financial expertise, and activity. This research finds contributions in that it explores the effect of audit committee characteristics on audit quality in consideration of audit market concentration and utilizes the differential types of the characteristics of an audit committee at the same time.
Keywords
Audit Committee; Corporate Governance; Financial Expertise; Audit Market Concentration; Audit Quality;
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