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http://dx.doi.org/10.5392/JKCA.2022.22.02.593

How Do Auditors Respond to Labor Investment Inefficiency?  

Cho, Jungeun (부경대학교 경영대학)
Publication Information
The Journal of the Korea Contents Association / v.22, no.2, 2022 , pp. 593-604 More about this Journal
Abstract
This study examines how auditors respond to labor investment inefficiency, specifically its impact on audit fees and audit hours. Using a sample of Korean firms listed on the Korea Stock Exchange from 2003 to 2018, our empirical results indicate that firms involved in inefficient investment in labor incur higher audit fees and audit hours. This implies that auditors consider inefficient labor investment to cause considerable business risk, thus requesting higher external audit fees to compensate for higher audit risk. Furthermore, auditors expend more time and effort while auditing those firms by expanding the audit procedures to reduce the audit risk to an acceptable level. Finally, this study provides empirical evidence on whether the investment inefficiency in labor, an important factor in firms' competitiveness, incur higher audit fees as well as audit hours.
Keywords
Labor Investment Inefficiency; Audit Fees; Audit Hours; Audit Risk;
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Times Cited By KSCI : 2  (Citation Analysis)
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