Audit Opinion and Earnings Quality: Evidence from Korea

Seon-Ju Yoon, Jaimin Goh, Jin-Young Jung


This study examines whether the decrease in qualified opinions is due to improved accruals quality. The proportion of qualified opinions has been declining in Korea for about 10 years. However, it has not been reported that earnings quality has improved. We analyze this contradictory relationship using two models. We find that Korean firms’ accruals quality has no association with unqualified opinions. This means that the increasing trend in unqualified opinions is occurring regardless of earnings quality, although audit opinion chiefly depends on it. Thus, our results suggest that more researches are required to determine why qualified opinions are declining.

Keywords: audit opinion; earnings quality; accruals

DOI: 10.7176/EJBM/12-30-02

Publication date:October 31st 2020

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