ScholarWorks@성균관대학교

초록

This paper examines the effect of client importance on the input-based and output-based audit quality. Client importance affects the auditor's behavior, which may have either a positive or negative impact on the performance of the external auditor's role. Carcello et al.(2002) emphasize the input factors of audit and audit procedure. Most prior studies have focused on the output-based audit quality, but this study is expected to provide valuable insights into both the input-and output-based aspects in the study of the effect of client importance on the audit quality. The main results of this study are as follows. First, we find that total audit hours are positively correlated with client importance. Second, when total audit hours are disaggregated into labor mix hours, client importance shows a differential effect on labor mix hours. Furthermore, the positive relationship between client importance and partner hours is observed. Third, the relationship between client importance and the output-based audit quality, proxied by discretionary accruals, is found to be significant. In addition, the negative relationship between client importance and discretionary accruals is observed when the effect of audit hours is considered. Moreover, this study shows that senior hours have a significant negative effect on the relationship between client importance and absolute discretionary accruals. This study is expected to provide potential implications for policymakers and regulators. © 2025, Korean Accounting Association. All rights reserved.

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