감사품질과 이익투명성

초록

Increasing accounting transparency has recently been discussed. Previous studies have noted that accounting transparency is closely related to the reliability of financial information. Accordingly, we expect that the reliability of financial information increases accounting transparency. Audit quality is the quality of the audit work and is generally defined as the joint probability of expertise and independence of the auditor. Here, an auditor's expertise refers to the probability of finding distortions or errors contained in the financial statement and independence refers to the probability of reporting any discovered distortion or errors. A high audit quality means that expertise and independence result in improved reliability of accounting information. One of the most useful pieces of information for investment decision making and performance evaluation is accounting earnings. However, Financial Supervisory Service(FSS) often points out poor-quality audit reports due to the earnings overstatement. Thus, auditors providing high-quality audit service will concentrate on the reliability of accounting earnings in order to maintain their reputations. As a result, a higher audit quality of an auditor will have a positive impact on the transparency of the earnings. In this context, this study examined the accounting transparency in the capital market perspective. That is, we examine whether audit quality influences earnings transparency. Specifically, this study examined the impact of audit quality on earnings transparency by using size of auditors and the auditor’s industry specialization as the proxies for audit quality and by measuring earnings transparency based on prior studies of Cheng and Subramanyam (2008) and Barth et al. (2013). The results showed a significantly positive relationship between the audit quality and earnings transparency. Therefore, as audit quality increased, so did accounting transparency. Although previous research has studied the transparency of accounting in the financial statements aspect, this study examined the accounting transparency in the capital market perspective. Compared with prior research, our study addresses the determinants of earnings transparency and could provide an additional perspective on audit quality with its focus on the influence of audit quality on earnings transparency. The results of this study also have implications for audit quality and the improvement of the auditor appointment system for the purpose of establishing earnings transparency for the information user, client firms, and supervisory institutions.

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