This study explores audit implications of shared leadership in client firms. Analyzing data from 2002 to 2013 of Korean listed companies, we find that auditors spend fewer audit hours and charge lower audit fees for clients with multiple CEOs. Additional tests reveal that the lower audit fees for co-CEO clients are likely attributable to reduced audit effort rather than to reduced hourly rates. We also document that firms with co-CEOs exhibit better-reporting quality than do firms with a solitary CEO. In sum, this article presents evidence that mutual monitoring via co-CEO appointments assures high-quality financial reporting of audit clients, and thus leads to reduced audit fees.

Using the performance evaluation data of Korean SOEs, the impact of information asymmetry within target setting on ratcheting intensity and the ratchet effect is investigated. It was found that ratcheting intensity is substantially greater (lower) for target-setting methods that have utilized limited (plenty of) information on past performance and that the ratchet effect increases with ratcheting intensity. These results indicate that information asymmetry between the superior and subordinates is one of the crucial drivers of the ratchet effect. It was also documented that when subordinates sufficiently beat target, the ratchet effect is much greater for relatively “top-down” target setting than that for relatively “bottom-up” target setting. This finding suggests that securing subordinates’ active participation in the target-setting process can alleviate their effort reduction incentive.

SUMMARY: This study examines the audit pricing by the auditor of a parent company (i.e., principal auditor) when other independent auditors that are not affiliated with the principal auditor (i.e., other auditors) are involved in the audit of the group financial statements. Using Korean data, we find that audit fees charged to the parent company by the principal auditor are negatively associated with the proportion of total assets or sales of subsidiaries audited by other auditors in the pre-IFRS period. This finding is consistent with the argument that the principal auditor views subsidiaries audited by other auditors as a business opportunity to attract new clients, and thus offers fee discounts to its client. However, in the post-IFRS period, this negative relation between audit fees and the involvement of other auditors becomes insignificant or positive, suggesting that IFRS adoption restricts auditors' strategic behavior in audit pricing because IFRS adoption increases the audit complexity and risk associated with the involvement of other auditors.

This study investigates the effects of governance structure on the relationship between disclosure quality and credit ratings. Firms with greater control-ownership divergence are more likely to pursue their private interests because controlling shareholders obtain the benefit of managerial decision in accordance with controlling interest and they bear the related risk only to the shareholding value. The greater divergence decreases the level of disclosure, thereby increasing the information asymmetry and agency problems, and, ultimately may be harmful to the firms’ sustainability. We analyze data from the listed Korean companies belonging to a large business group that issued corporate bonds for the period 2003–2015, and find that there is a positive relationship between fair disclosure and credit ratings; however, it is weakened as the control-ownership divergence increases. These results suggest that firms with a high quality of disclosure are assigned better credit ratings. However, if their governance structures are poor, the capital market may penalize the reliability of the released information.

기업이 보유한 생산자원을 얼마나 적극적으로 활용하는지를 나타내는 지표인 가동률은 경영자의 전략이나 미래 경영성과에 대한 예측정보 등으로서 중요한 경제적 의미를 갖는다. 본 연구는 가동률과 과잉생산 실제이익조정 사이의 관계를 조사하였다. 2001년부터 2016년까지 상장기업을 대상으로 분석한 결과, 가동률이 낮은 기업들에서는 가동률과 과잉생산 실제이익조정 사이에 유의한 양(+)의 관계가 있었으나, 가동률이 높은 기업들에서는 유의한 음(-)의 관계가 나타났다. 또한, 가동률과 과잉생산 실제이익조정 사이에는 역U자 비선형관계가 발견되었다. 이러한 결과는 가동률과 과잉생산 실제이익조정 사이의 관계가 가동률 수준에 따라 차별적이라는 것을 의미한다. 본 연구는 가동률이 실제이익조정에 영향을 미치는 상황적 특성변수임을 확인함으로써 관련 연구를 확장하였다. 또한, 투자자, 외부감사인, 재무분석가, 규제기관 등 이해관계자가 기업의 실제이익조정 가능성을 사전에 평가하는데 가동률 정보를 활용할 수 있다는 실무적 시사점을 제공한다.