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NTU Management Review Vol. 35 No. 1 Apr. 2025

provide clearer insights into the long-term impacts of the fraud case.

5. Originality/Contribution

This study comprehensively examines the relationship between KY companies
and financial statement comparability, further analyzing whether non-KY companies
having board interlocks with KY companies exhibit differences in financial statement

comparability compared to those without such interlocks. This study also investigates the
impacts of the case of Pharmally and the COVID-19 pandemic on financial statements
comparability of KY companies and that of non-KY companies. This unique dual-factor
situation reveals that due to the pandemic, auditors are unable to conduct on-site audits,
essentially preventing KY companies from improving their comparability like local

companies did after the fraud case.
The main contributions of this study are as follows. First, we address the gap that
past research rarely uses Taiwan data to study the financial statement comparability of KY
companies. Second, we consider the impact of board interlocks with KY companies on the

comparability of non-KY companies' financial statements. Third, we recognize that the
ability to conduct on-site audits is the key factor affecting audit quality under the influence
of both the case of Pharmally and the COVID-19 pandemic. This finding aligns with the
results of Choi, Kim, Qiu, and Zhang (2012), suggesting that the farther the distance is

between the auditee and the auditing firm, the poorer is the audit quality.

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