사업보고서의 재량적 가독성과 감사노력

초록

[Purpose]This study investigates how auditors respond to annual reports that contain longer sentences and more complex vocabulary. We isolate the discretionary component of readability to focus on intentional obfuscation and examine whether auditors adjust their audit effort accordingly. Additionally, we explore whether auditors perceive unexplained obfuscation as an audit risk in firms with effective corporate governance, where managerial discretion is constrained. [Methodology]We test our hypotheses using a sample of KOSPI and KOSDAQ listed firms from 2014 to 2020. To ensure the robustness of our findings, we employ six different readability models to measure our key variable and analyze its relationship with the dependent variable, audit effort. [Findings]First, we find partial evidence suggesting a positive association between lower readability and increased audit effort, indicating that more difficult－to－read annual reports require greater audit effort. Second, this positive association is evident only in firms with ineffective governance, where managerial discretion is less constrained. Specifically, using board independence and CEO duality as proxies for corporate governance, we observe this relationship only in firms with low board independence and in firms where the CEO also serves as the board chair. Finally, this relationship remains significant after controlling for endogeneity. [Implications]This study offers policy implications for disclosure regulations, confirming that auditors consider the writing style of annual reports when evaluating audit risk. Furthermore, it contributes to the academic literature by emphasizing the importance of considering both readability and corporate governance in audit research. This study also underscores the necessity of distinguishing between the discretionary and non－discretionary aspects of readability in future research.

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