Title: The effect of input hours by each audit professional on audit efficiency: evidence from Korea

Authors: Sang-Lyul Ryu; Jayoun Won

Addresses: College of Business, Konkuk University, 120 Neungdong-ro, Gwangjin-gu, Seoul, 05029, Korea ' College of Social Sciences, Sunchon National University, 255 Jungang-ro, Suncheon, 57922, Korea

Abstract: After the global financial crisis of 2008, many countries worldwide, including the UK and EU, have reformed the auditing sector to enhance accounting transparency. In 2017, Korea revised several acts related to reforming its auditing sector. This paper examines whether audit efficiency has improved in the pre- and post-reform periods and investigates the impact of audit firms' human resource inputs on audit efficiency. We found that the technical efficiency of audits provided by non-Big Four firms in the Korea Composite Stock Price Index (KOSPI) market decreased significantly for three years before and after the 2017 audit reform. The Big Four (Big4) utilised quality reviewers and other experts more efficiently than non-Big4 firms, while non-Big4 firms made better use of certified public accountants (CPAs) and apprentice CPAs than the Big4. The findings can help understand the economic consequences of audit reform in countries undergoing audit sector reform.

Keywords: audit fees; audit hours; audit efficiency; big4; audit reform; DEA; data envelopment analysis.

DOI: 10.1504/IJTGM.2023.132040

International Journal of Trade and Global Markets, 2023 Vol.17 No.3/4, pp.319 - 329

Received: 25 Jun 2021
Accepted: 21 Sep 2021
Published online: 07 Jul 2023 *

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