The Determinants of Auditor Communication and Its Consequences for Audit Effort

Abstract

Auditing standards and academic literature highlight the importance of effective communication between auditors and those charged with governance. However, empirical evidence on its determinants and consequences remains limited. To address this gap, we use data from Korea, where auditor–audit committee communication is publicly disclosed, and provide new evidence on both the determinants of such communication and its association with audit effort. We find that communication frequency is positively related to client risk characteristics and governance strength, and this association is asymmetric. We further document that greater communication is associated with higher audit fees and increased audit hours. This association is more pronounced for face‐to‐face meetings, meetings conducted during the fiscal year, and engagements involving Big 4 and industry‐specialist auditors. Overall, our findings provide insights for regulators developing guidance on audit communication and contribute to the growing literature on auditor–audit committee coordination.