IDEAS home Printed from https://ideas.repec.org/a/ids/ijmefi/v16y2023i3-4p261-271.html
   My bibliography  Save this article

Effect of the audit hours regulation on audit fees and scale efficiency in audit firms: Korean evidence

Author

Listed:
  • Jayoun Won
  • Sang-Lyul Ryu

Abstract

Many countries have increased accounting transparency by imposing rules on external auditors. Korea amended the Act on External Audit of Stock Companies (EAA), which has been in effect since 2019. The amendments to the EAA have included the standard audit hours (SAH) rule that mandates auditors to spend a certain amount of audit hours determined by the regulation. Korea expected that the SAH rule would secure sufficient audit hours and improve audit quality. However, audit practitioners argued that the SAH hugely increased audit hours resulted in significantly raised audit fees. Our findings showed that though audit hours and fees increased, audit firms' scale efficiency improved from 2018 to 2019. Moreover, auditors spent more hours on skilled audit professionals than unskilled ones, which led to high audit quality. This paper's results may interest policymakers in other countries that reformed audit regulations to ameliorate audit quality.

Suggested Citation

  • Jayoun Won & Sang-Lyul Ryu, 2023. "Effect of the audit hours regulation on audit fees and scale efficiency in audit firms: Korean evidence," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 16(3/4), pages 261-271.
    • Handle: RePEc:ids:ijmefi:v:16:y:2023:i:3/4:p:261-271
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=131897
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijmefi:v:16:y:2023:i:3/4:p:261-271. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=218 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.