The Effects of Auditor Designation by the Regulator on Auditor Decisions: Evidence from Korea

What is it about?

The Korean market regulator designates external auditors for certain companies that are likely to have strong incentives for managing their earnings under the auditor designation system (ADS). Even though Korea's ADS may be unique among audit engagement systems worldwide, transferring auditor selection power to the accounting regulator (ADS) could be a policy measure to improve audit quality. In this regard, it is important to investigate the effects of ADS on auditor decisions.

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