Empirical Analysis on Economic Function of Auditing

2016 Fiscal Year Final Research Report

• Project/Area Number: 25780282
• Research Category: Grant-in-Aid for Young Scientists (B)
• Allocation Type: Multi-year Fund
• Research Field: Accounting
• Research Institution: Kobe University
• Principal Investigator: TAKADA Tomomi 神戸大学, 経営学研究科, 准教授 (00452483)
• Project Period (FY): 2013-04-01 – 2017-03-31
• Keywords: 監査 / 実証研究 / 監査報酬

Outline of Final Research Achievements

In this research project, I investigate the economic function of financial statement auditing. The principle findings are as follows: (1) firms exert their bargaining power against auditors so that they can pay lower and sticky audit fees, which effectively leads to decreasing audit quality, and (2) private companies, those who are not mandatory required to have their financial statements audited, receive benefits in the form of a decrease in interest rate from the bank with having a longer transaction duration, when they voluntarily purchase assurance from an auditor. These results indicate that auditing has an economic value in the Japanese market, whereas relatively lower bargaining power of auditors against their clients would jeopardize audit quality.

Free Research Field

会計