채권시장은 감사인의 비정상감사보수를 인식하는가? : 비정상감사보수와 회사채 스프레드를 중심으로

Prior literature argues that there is a relationship between audit fee and audit quality. This study adds on the prior literature by investigating whether bondholders demand larger risk premium for firms with abnormal audit fees due to the effect of abnormal audit fee on the audit quality. Specifically, it examines the association between the cost of debt proxied by bond spread and abnormal audit fees depending on whether the clients pay more than or less than the normal level of audit fees. First, positive abnormal fees can influence the independence of auditors and decrease audit quality, which in turn leads to the increase in cost of debt. Second, negative abnormal fees can also increase cost of debt because auditors can decrease audit efforts when they are paid less than their expectations on the normal level of audit fees.
Therefore, this paper expects that the association between cost of debt and abnormal fee is positive for the subsample of clients with positive abnormal fees, and negative for the subsample of clients with positive abnormal fees.
Using a large sample of listed firm-year observations over 2000-2009 period, this paper finds consistent results with the expectation. First, bond spread is significantly and positively associated with the abnormal audit fees for the subsample of clients with positive abnormal fees. It indicates that bond spread increases with positive abnormal audit fees. Next, bond spread is significantly and negative positively associated with the abnormal audit fees for the subsample of clients with negative abnormal fees. It indicates that bond spread increases with negative abnormal audit fees. Overall, the results suggest that abnormally high or low audit fees can decrease audit quality, which leads to the cost of debt being higher. And the results support Choi et al.(2010), which argue that relationship between abnormal audit fees and audit quality can be nonlinear and asymmetric.
This paper contributes to existing literature by providing the evidence that bondholders recognize the effect of abnormal audit fee on the audit quality. Additionally, it adds to the existing literature by using bond spread as a proxy for cost of debt.