The Relationship between Partner Audit Hours and Cost of Equity

Kim, Jeong-Taek; Lee, Sanghyuk

doi:10.21737/raps.2022.11.27.4.1

RAPS

2022

DOI: 10.21737/raps.2022.11.27.4.1

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The Relationship between Partner Audit Hours and Cost of Equity

Jeong-Taek Kim¹,

Sanghyuk Lee²

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2023

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The effects of accounting comparability, income smoothing and engagement partners on audit risk

Kim,

Park

2023

Int J Auditing

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This study investigates whether accounting comparability, income smoothing and engagement partners affect audit risk perceived by auditors. We find that both accounting comparability and income smoothing reduce perceived audit risk and that the interaction of these two variables incrementally reduces perceived audit risk. We also find that the interaction of accounting comparability and income smoothing incrementally reduces perceived audit risk when engagement partners exert more effort in auditing. The results imply that when clients exhibit both cross‐sectional and the time‐series informativeness of financial statements, auditors lower their perceived audit risk and reduce risk premium, which decreases deadweight cost to these clients. This is especially the case when engagement partners exert more effort in auditing. To the best of our knowledge, this is the first empirical study to test the interaction effect of accounting comparability, income smoothing and engagement partners on perceived audit risk.

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The effects of accounting comparability, income smoothing and engagement partners on audit risk

Kim,

Park

2023

Int J Auditing

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The Relationship between Partner Audit Hours and Cost of Equity

Cited by 1 publication

References 0 publications

The effects of accounting comparability, income smoothing and engagement partners on audit risk

The effects of accounting comparability, income smoothing and engagement partners on audit risk

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