Audit fees and corporate innovation: Auditors' response to corporate innovation

Hyung-Tae Kim, Seungwon Lee, Sung-Jin Park and Brandon Lee

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate the extent to which a client’s innovative effort affects the level of audit effort and whether the innovative-effort efficiency can attenuate the demand for greater audit effort associated with a client’s risky research-and-development (R&D) investments. We find that a client firm’s strategic emphasis on corporate innovations may require greater audit effort, but the efficiency of a firm’s innovative effort can attenuate the demand for heightened audit effort against risky, innovative efforts. Findings suggest that the external auditor does not always discourage corporate innovation as the efficiency of a firm’s innovation may lower the client business risk perceived by an auditor.

Keywords: Corporate innovation; Auditors; Research and development; Risk management (search for similar items in EconPapers)
JEL-codes: M42 O32 (search for similar items in EconPapers)
Date: 2019-05-27
New Economics Papers: this item is included in nep-acc, nep-bec, nep-cfn, nep-rmg and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101081

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