Communication during the Pandemic: Use of videoconferencing in Audit Committee-Auditor Communication

Abstract

Using Korean listed firms’ mandatory disclosure on the communication method for meetings between the Audit Committee and auditors from 2019 to 2020, we find that videoconferencing leads to weaker audit quality. We measure the degree of videoconferencing by the proportion of videoconferencing in the total number of meetings between the Audit Committee and auditors. We provide preliminary results on whether changes in communication methods affect audit quality. Our results are robust to change analyses, balanced sample analyses, including auditor fixed effects, and using an alternative measure of audit quality and videoconferencing. We find that Audit Committee independence or expertise does not affect the relationship between videoconferencing and audit quality but holding more formal Audit Committee meetings during the year mitigates the negative impact of videoconferencing on audit quality. Our paper contributes to the literature on information processing of Audit Committees.