Effects of agency costs on the relationship of corporate governance with audit quality and accounting conservatism in the Korean audit market

Soo Young Kwon, Nam Ryoung Lee and Eunsun Ki

Asia-Pacific Journal of Accounting & Economics, 2014, vol. 21, issue 2, 157-185

Abstract: This study examines the effects of agency costs ( AC ) on the relationship of corporate governance with audit quality and accounting conservatism. We employ audit hours and audit fees as proxies for audit quality, and accounting conservatism as a proxy for financial reporting quality. We find that the positive relation between corporate governance and audit quality is attenuated in the presence of AC . We also document that AC tend to weaken the negative relation between corporate governance and accounting conservatism. These results demonstrate that the relationship of corporate governance with audit quality and accounting conservatism is conditional on AC .

Date: 2014
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DOI: 10.1080/16081625.2012.762970

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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