부산대학교 도서관

This paper document evidence on the relation between audit firm tenure and audit quality using the absolute values and the sign of discretionary accruals estimated by the Modified Jones Model(Dechow et al. 1995), the Kothari Model(Kothari et al. 2005), and the Ball and Shivakumar Model(2006) as the proxies for audit quality. This paper attempts to compare the likely effect on audit quality of mandatory auditor rotation regime in Korea and China for the following reasons: Chinese Certified Public Accountant Industry has some distinguishing features in comparison with Korea: (1) It started relatively late and developed incompletely. (2) The reform of audit market was led by the government. (3) The concentration of audit market is on the low side(in this paper, the Big 4 audit firms audit 58% of the Korean clients, while only 4.8% of the Chinese clients), market competition is more fierce than Korea. Besides, although both countries have implemented mandatory auditor rotation regime, the ways of mandatory auditor rotation regime in China is mandatory audit firm rotation and in Korea is mandatory audit partner rotation.The results indicate that there is no evidence of an association of long auditor tenure with audit quality, but this paper suggests that, in China, the mandatory rotation regime has some effects on audit quality and the effects in China is more than that in Korea, which is consistent with the hypothesis. Furthermore, this paper finds the audit quality of Korea is better than that of China.