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Audit Pricing of Shared Leadership

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  • Youn-Sik Choi
  • Jiwon Hyeon
  • Taejin Jung
  • Woo-Jong Lee

Abstract

This study explores audit implications of shared leadership in client firms. Analyzing data from 2002 to 2013 of Korean listed companies, we find that auditors spend fewer audit hours and charge lower audit fees for clients with multiple CEOs. Additional tests reveal that the lower audit fees for co-CEO clients are likely attributable to reduced audit effort rather than to reduced hourly rates. We also document that firms with co-CEOs exhibit better-reporting quality than do firms with a solitary CEO. In sum, this article presents evidence that mutual monitoring via co-CEO appointments assures high-quality financial reporting of audit clients, and thus leads to reduced audit fees.

Suggested Citation

  • Youn-Sik Choi & Jiwon Hyeon & Taejin Jung & Woo-Jong Lee, 2018. "Audit Pricing of Shared Leadership," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(2), pages 336-358, January.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:2:p:336-358
    DOI: 10.1080/1540496X.2017.1348292
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    Cited by:

    1. Jiyeon Lee & Jin-Ha Park & Jiwon Hyeon, 2019. "Co-CEOs and Asymmetric Cost Behavior," Sustainability, MDPI, vol. 11(4), pages 1-15, February.
    2. Hou, Fei & Liu, Jie & Pang, Tingyun & Xiong, Hao, 2020. "Signing auditors’ foreign experience and audit pricing," Economic Modelling, Elsevier, vol. 91(C), pages 300-312.
    3. Xiong, Hao & Hou, Fei & Li, Hanwen & Wang, Huabing, 2020. "Does rice farming shape audit quality: Evidence from signing auditors level analysis," Economic Modelling, Elsevier, vol. 91(C), pages 403-420.
    4. Seung Weon Yoo & Gun Lee & Jae Eun Shin & Jinbae Kim, 2021. "Firm performance and the adoption of a co-CEO structure: Evidence from Korea," Asia Pacific Journal of Management, Springer, vol. 38(4), pages 1351-1368, December.
    5. Jan-Philipp Ahrens & Andrea Calabrò & Jolien Huybrechts & Michael Woywode, 2019. "The Enigma of the Family Successor–Firm Performance Relationship: A Methodological Reflection and Reconciliation Attempt," Entrepreneurship Theory and Practice, , vol. 43(3), pages 437-474, May.

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