Use of videoconferencing in audit committee–auditor communication during the COVID-19 pandemic: evidence from Korea
ISSN: 0268-6902
Article publication date: 19 December 2024
Issue publication date: 30 January 2025
Abstract
Purpose
The purpose of this study is to examine whether the use of videoconferencing for communication between the audit committee (AC) and auditors affects the quality of client firms’ audits.
Design/methodology/approach
This paper analyzes the mandatory disclosure information on AC–auditors communication using 1,065 Korean listed firm-years for the fiscal years 2020 and 2021. The details of AC–auditor communication (i.e. the extent of firms’ use of videoconferencing) are manually collected from audit reports.
Findings
This study finds that videoconferencing has a negative impact on audit quality, suggesting that it is not an effective communication medium between AC and auditors. The results are robust to alternative research designs (e.g. entropy-balanced sample, propensity score matching analysis and change analysis) that address endogeneity concerns. This study also finds that while the negative effect of videoconferencing is mitigated by holding more frequent AC meetings, neither AC independence nor expertise mitigates this effect.
Research limitations/implications
This paper suggests that videoconferencing may affect audit quality by hurting the discussion between the AC and auditors.
Practical implications
The findings that videoconferencing impairs the effectiveness of ACs and thus lowers audit quality have practical implications as the COVID-19 pandemic has significantly changed how AC members and auditors interact. This study offers timely and valuable insights into the potential implications of these pandemic-induced changes on audit environments.
Originality/value
This study provides large-sample empirical evidence that directly examines the effect of videoconferencing on audit quality, enhancing the understanding of the communication dynamics between the AC and auditors. This study also contributes to the literature on the role of ACs in emerging markets by highlighting the information processing role of the AC.
Keywords
Acknowledgements
The authors are grateful to seminar participants at IE University and the 2022 Korean Accounting Association International Conference for their helpful comments. This work was supported by the 2024 Research Fund of the University of Seoul.
Citation
Cho, M., Jo, J., Jung, T. and Kim, N.K.W. (2025), "Use of videoconferencing in audit committee–auditor communication during the COVID-19 pandemic: evidence from Korea", Managerial Auditing Journal, Vol. 40 No. 2, pp. 179-213. https://doi.org/10.1108/MAJ-07-2023-3968
Publisher
:Emerald Publishing Limited
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