• The Journal of the Korea Contents Association
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• v.15 no.7
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• pp.477-488
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• 2015

This study investigates the association between non-audit services and audit quality, using a sample of firms in which audit services and non-audit services are provided by a same audit firm. This study extends previous studies by separating auditors into Big4 and Non-Big4 audit firms as each group may have different incentives to impair their independence. According to the empirical results, audit quality, proxied by absolute value of discretionary accruals has significant negative association with non-audit service fee for Non-Big4 audit firms, but not for Big4 audit firms, suggesting that Non-Big4 audit firms may impair their independence with increased non-audit service fees. Non-Big4 audit firms are known to be relatively small and local firms that might be highly economically dependent upon a specific client firm whereas Big4 audit firms are not. This results may be of interest to regulators and capital market investors and standard setters who concern a recent trend of increasing non-audit services that are provided by an audit firm which also provides audit service at the same time.

• Korean small business review
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• v.42 no.4
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• pp.123-146
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• 2020

This study, targeting KOSDAQ-listed companies, examined the relationship between variability of accruals and corporate characteristics. First, the analysis results show that executives of companies with high debt ratios are more likely to violate debt contracts, so there is a strong temptation to use discretionary accrual items. Second, for companies with large volatility in operating cash flows, Executives of these companies are strongly inclined to utilize accruals for the purpose of abuse of discretion. Third, the larger the company, the more sensitive it is to political costs, so it is less tempted to use the accruals item than a smaller company. Fourth, the corporate age is thought to be the maturity of the company, Executives of such companies have little room to use accruals to abuse their discretion. Fifth, in the case of profit dummy variables, the companies reporting losses have more temporary accrual items than those reporting profits, so this increases the uncertainty in their accounting information than the latter. Sixth, for those companies that are indicated as inappropriate as a result of audit, the more likely their executives are to use the accrual items, and the lower the quality of their accounting profits is. Lastly, Companies audited by 4 Big domestic accounting firms have less discretionary accrual fluctuations than companies audited by non-big 4 accounting firms. Thus, it was found that the accrual amount allows the discretion of corporate executives differently according to the characteristics of the company.

• Journal of the Korea Convergence Society
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• v.10 no.1
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• pp.227-238
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• 2019

In this study, we investigate the effects of disclosure and high-quality audit on donations to charitable organizations in Korea. We find that the mandatory disclosure of financial information and high-quality audit is significantly and positively related to donations to charitable organizations. We also find that charitable organizations audited by Big 4 audit firms have greater likelihood to receive more donations, compared to those audited by non-Big 4 audit firms. Furthermore, we find that those positive associations are more pronounced for smaller charitable organizations. Collectively, those results imply that, as in the profit-making sector, disclosure and high-quality audit play a critical role in enhancing accountability and transparency of financial reporting and revenue for charitable organizations.

• Journal of the Korea Convergence Society
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• v.10 no.6
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• pp.203-218
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• 2019

Using the sample of 104 mutual savings banks inspected by the Financial Supervisory Service (FSS) on June 2011, this study examines if mutual savings banks manage BIS capital adequacy ratio using allowance for bad debts through comparison of BIS capital adequacy ratio before and after the 2011 when mutual savings banks experienced a large-scale restructuring by financial supervisory authorities. We find that mutual savings banks mainly use the allowance for bad debts to manage BIS capital adequacy ratio. It also shows that mutual savings banks with a business suspension order by FSS manage BIS capital adequacy ratio more than the others. Lastly, we find that Non Big4 auditors as well as Big 4 auditors don't effectively audit the use of the allowance for bad debts for mutual savings banks to manage their BIS capital adequacy ratio.