피투자회사의 개수 및 구분방식에 따른 지분법 적용의 적정성 분석

The purpose of this study is to analyse whether the number of and the classification of investees have an influence on the difference between parent companies' net income and consolidated net income. This study considers the difference as a proxy of inadequate application of equity method accounting, and examines the difference by classifying the investees into two different categories: subsidiaries vs non-subsidiaries and domestic vs foreign investees. During the test period from 2001 to 2004 I use Tobit model with dependent variable as the difference divided by the beginning balance of parents' total assets and with independent variables as the number of and the classification of investees and control variables. The results of this study show that the difference between parents' net income and consolidated net income has a significantly positive correlation with the number of investees excluded from consolidation. Especially I find that the difference has the most significant positive correlation with the number of foreign investees excluded from consolidation. Also the results of this study suggest practical implications that those auditors which serve clients with many investees should establish their audit strategy more carefully.