회계법인 특성이 감사보수 결정에 미치는 영향 = The Effect of Audit Firm`s Characteristics on Audit fee Decisions

다국어 초록 (Multilingual Abstract)

This study investigates how auditor`s financial and non financial characteristics affect audit fee and audit fee decision-making. Specifically, it is test whether auditor characteristics variables, such as, auditors` size, reputation, profitability, financial soundness, degree of revenue concentration on audit service, and individual auditor`s experience determine the dynamics of audit fee negotiation. Additionally, this study examines auditor`s differential behaviour in audit work by analyzing the effect of auditor`s characteristic on audit hours and audit fee per hour. This paper investigates audit fee data of 5,719 firms-year from 2004 to 2008, and the results are as follow. First, as anticipated, it is observed that the bigger auditor`s size and the better auditor`s reputation is, the higher the audit fees are. This result indicates that high ability to indemnify represented by auditors` size and high-quality audit services assumed on good reputation of those have positive influence on determination of audit fees. Second, it is observed that the less profitability and the weaker financial soundness of audit firms are, the lower the audit fees are. Especially in Big 4 audit firms, audit fee decreases relatively high as the leverage ratio increases. This means that auditors with low profitability and financial soundness make much effort to accept and maintain clients by participating in fee-dumping competitions and Big 4 with high fixed costs burden have pressure to provide discounts on audit fees to cover such costs. Third, it is observed that while audit firms with high degree of revenue concentration spend more input time on audit, more experienced auditors are likely to demand low audit fees and spend less hours on audit. Lastly, the study of effect on auditor`s characteristics on determinants of audit fees shows that unit audit fee ratio that takes into consideration of audit scope and risks tends to increases as the size of auditors gets bigger. This implies that the bigger auditors are more sensitive to audit risks and also present that determinants of audit fees are fundamentally differentiated by auditors` characteristics. This paper differs from precedents studies as it examines determinants of audit fees by focusing on roles of auditors. Also, this paper extends the scope of studies on audit fees by presenting the empirical results that diverse and specific characteristics of auditors determine the audit fees. In conclusion, this paper helps understand the decision making process of auditors by verifying differentiated determinants of audit fees based on the auditors` characteristics which may be difficult to observe directly.