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Do Relatively More Efficient Firms Demand Additional Audit Effort (Hours)?
Australian Accounting Review ( IF 2.680 ) Pub Date : 2020-11-02 , DOI: 10.1111/auar.12327
Dafydd Mali 1 , Hyoung‐joo Lim 2
Affiliation  

We examine whether firms with higher relative efficiency (operational performance) require additional audit effort (hours) to signal audit quality to demonstrate that their financial reporting systems are robust. Therefore, we use a Korean sample of publicly listed firms because of the Korean audit hour policy which mandates that audit hour information be made available for market participants. We find that client firms with higher relative efficiency have higher audit hours, suggesting that management has an incentive to demand additional audit hours for signalling purposes, and that shareholders, amongst other stakeholders, have an incentive to demand external monitoring to reduce potential agency problems. The results show that relative efficiency is a unique measure of firm performance that can provide insights into a client firm's business and audit risk. We also find evidence suggesting that audit firms do not subject clients to a fee (fee per hour) premium based on relative efficiency, supporting our finding that client firms require audit effort for signalling purposes. Thus, our results have important implications for policymakers about audit effort demand.

中文翻译:

效率相对较高的公司是否需要额外的审计工作(小时)?

我们研究了具有较高相对效率(运营绩效)的公司是否需要额外的审计工作(小时)来表明审计质量,以证明其财务报告系统是稳健的。因此,我们使用韩国上市公司样本,因为韩国的审计时间政策要求向市场参与者提供审计时间信息。我们发现,相对效率较高的客户公司有更多的审计时间,这表明管理层有动机要求额外的审计时间用于信号目的,而股东以及其他利益相关者有动机要求外部监督以减少潜在的代理问题。结果表明,相对效率是衡量公司绩效的独特指标,可以提供对客户公司的洞察力 s 业务和审计风险。我们还发现证据表明,审计公司不会根据相对效率向客户收取费用(每小时收费),这支持我们的发现,即客户公司需要审计工作以发出信号。因此,我们的结果对决策者有关审计工作需求的重要影响。
更新日期:2020-11-02
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