Prior literature suggests that the effect of adopting the International Financial Reporting Standards (IFRS) could vary by country-specific or firm-specific factors. In particular, we focus on the effect of the strength of corporate governance of a firm, a firm-specific characteristic, prior to the adoption of IFRS. Specifically, we use the Korea Corporate Governance Stock Price Index, a metric for the corporate governance structure in Korea, to examine whether the corporate governance structure influences the effect of IFRS adoption on the analyst’s earnings forecasts in Korea. We find that the beneficial effect of IFRS adoption on analyst forecast errors is observed for firms with moderate corporate governance prior to IFRS adoption, but not for firms with superior or inferior corporate governance. We interpret our findings such that firms with strong or weak corporate governance do not benefit from IFRS adoption, because firms with strong corporate governance already had transparent information system prior to IFRS adoption and firms with weak corporate governance failed to implement IFRS properly.

Corporate social responsibility (CSR) is a pertinent strategy to enhance consumer perception of product quality and a company’s reputation. A growing body of literature has investigated whether corporate charitable contributions play a similar role to that of corporate social responsibility. Controversy still remains over the cause and effect of corporate charitable contributions. This study’s objective was to examine whether auditors apply more effort when reviewing firms with a higher level of corporate charitable contributions. For example, if auditors perceive corporate charitable contributions as the opportunistic behavior of managers, then the auditors thoroughly review and prepare financial statements. However, if auditors assess corporate charitable contributions as one of a firm’s ethical responsibilities, then they are not likely to put in more effort when reviewing such firms. This paper aims to examine how capital market participants assess a firm’s charitable contributions. Using an extensive set of data for Korea from 2008 to 2015, we conducted a battery of robustness analyses to address various endogeneity issues using the abnormal audit hour model, propensity score matching method, and 2SLS regression. We found that corporate charitable contributions were positively associated with audit hours. It indicated that auditors applied more effort when they reviewed firms with corporate charitable contributions. The results suggest that auditors in Korea do not perceive corporate charitable contributions as a CSR activity but rather as an indication of the opportunistic behavior of managers.