Abstract
This paper investigates the relationships between non-audit services, audit fee, audit hours and accounting quality. Previous studies have not provided consistent results for how simultaneous provision of audit and non-audit services by an independent auditor to a client company affects the audit quality. In addition, further studies have identified endogeneity in research method as the primary reason. Therefore, this study analyzed audit quality comprehensively using empirical analysis on data specific to Korea. This study employs research methods contrasting with existing studies in order to present a solution for the controversy related to the endogeneity from the effects of non-audit service provided by an independent auditor on audit quality. This study used audit compensation and abnormal accruals variables simultaneously, and audit time variable includes empirical data from Korean clients for comprehensive analysis. Study results found that the non-audit service significantly affects audit service quality before controlling for endogeneity. However, after controlling for endogeneity, even when the same independent auditor provides audit and non-audit services together, it did not affect the accounting quality.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.