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

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  • Soo Young Kwon
  • Nam Ryoung Lee
  • Eunsun Ki

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 .

Suggested Citation

  • Soo Young Kwon & Nam Ryoung Lee & Eunsun Ki, 2014. "Effects of agency costs on the relationship of corporate governance with audit quality and accounting conservatism in the Korean audit market," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(2), pages 157-185, June.
    • Handle: RePEc:taf:raaexx:v:21:y:2014:i:2:p:157-185
    DOI: 10.1080/16081625.2012.762970
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    Cited by:

    1. Ali M. Gerged & Babikir Bechir Mahamat & Ibrahim K. Elmghaamez, 2020. "Did corporate governance compliance have an impact on auditor selection and quality? Evidence from FTSE 350," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 17(2), pages 51-60, September.

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