부산대학교 도서관

The relation between audit firm size and audit quality has been a crucial issue. Many studies presented evidence that audit quality is associated with larger audit firm size. However, few studies researched the effects of Big 4 audit firms` audit quality and reputation on market premium or audit fees, until recently. Perhaps this is because it is difficult to distinguish the premium created by an audit firm`s reputation since the market premium is created from various sources, including audit quality and audit firm reputation. This study has three purposes. First, it compares the audit quality of Big 4 audit firms and non. Big 4 audit firms. It is a preliminary process for achieving this study`s second and main purpose. Second, this study tests whether a market premium due to audit firm reputation exists in the capital markets. For this purpose, this study divides the market premium into two sources; one from audit quality and another from audit firm reputation. Third, if a market premium is created by audit firm reputation in the market, then reputable audit firms are likely to require additional audit fees. Therefore, this study tests whether audit fees are affected by the audit firm reputation itself, above and beyond audit quality. Empirical findings are summarized as follows. First, the audit quality of Big 4 audit firms is better than that of non. Big 4 audit firms. Moreover, Big 4 audit firms have a fee premium, even after differences in audit quality are controlled for. This finding indicates that a fee premium is created by audit firm reputation, aside from audit quality. In addition, the results indicate that companies may pay additional audit fees that are due to audit firm reputation, as well as audit quality. This study differs from previous research in the following aspects. First, it verifies that the determinant factors of the market premium are either audit quality or simply Big 4 reputation beyond the audit quality of Big 4 audit firms, a topic that most domestic studies have not pursued. Second, this study presents evidence that sheds light on stock assessment by verifying that a market premium is produced by high audit quality and/or market recognition of Big 4 reputation. Third, this study examines constrains on audit quality and market premiums and verifies how the market premium is related to them after the audit quality is controlled for. Finally, this study examines whether companies will pay additional audit fees in the capital markets corresponding to a premium due to Big 4 reputation, besides any premiums for audit quality.