Purpose: Since the introduction of the New External Audit Act in 2018, the authority of external auditors has been expanded. In addition, the rigor of au- dit procedures has increased, thereby limiting management's intervention in the calculation of accounting information to some extent. Against this back- ground, we verified whether there was a difference before and after the introduction of the New External Audit Act in the relationship between CEO influence and discretionary perception of the feasibility of deferred tax assets.Research design, data, and methodology: We divided the entire sample into two subsets: a subset in pre-new external audit act era (2015-2017) and an- other subset in post-the act era (2018-2021). With these two subset, our study examined changes in CEO influence and discretionary Perception of the feasibility of deferred tax assets.Results: On one hand, prior to the introduction of the New External Audit Act in 2018, the greater CEO influence, the higher discretionary perception of the feasibility of deferred tax assets. On the other hand, since the introduction of the New External Audit Act in 2018, CEOs have insignificantly influenced discretionary perception of deferred tax assets. Accordingly, we found that the degree to which managers intervene in accounting audit procedures de- creases as external auditors’ independence has been strengthened since the introduction of the New External Audit Act in 2018.Implications: Our study could be different from previous ones in the sense that it examined the effects of the introduction of the New External Audit Act in 2018 in terms of the relationship between CEO influence and discretionary perception of the feasibility of deferred tax assets by verifying the difference between the introduction of the New External Audit Act in 2018.
Kim et al. (Wed,) studied this question.