적자 회피 및 이익 평준화를 위한 실제 이익조정 활동

The purpose of this study is to test whether managers conduct real earnings management. We hypothesize they would change operating activity, such as sales and production, to avoid loss and smooth earnings. These kinds of motivations for earnings management are well known to be most important and representative. Prior studies have shown that managers employ discretionary accruals and manipulate investment activity, namely change timing of asset sales, to manage earnings. This study, in addition, examines whether they would also extort operation, so called real earnings management. We look into abnormal cash flow from operation (ACFO), abnormal discretionary expense(ADE), and abnormal production cost(APC), to measure real earnings management. Empirical results are as follows. First, firms suspected to manage earnings for loss aversion show lower ACFO and ADE, and higher APC. This implies that they alter operating activity myopically to exaggerate accounting numbers. These opportunistic earnings management may impair future firm value. Second, firms suspected to smooth earnings could be classified into two groups. Firms with extremely large profit show downward real earnings management. That is to say, ACFO and ADE are higher, and APC is lower. On the contrary, no significant differences are found in firms with extremely large loss. We can translate it as the mixture of downward earnings management for big bath and upward for loss reduction. These opposite incentives may prevent from single direction of earnings management. Third, not only conventional metric like discretionary accruals but also variables reflecting real earnings management, that is ACFO, ADE, and APC, can detect earnings management significantly. Particularly, areas with different earnings management incentives show substantial differences between accrual-based and real earnings management. From these findings, we suggest that firms with different characteristics and situations vary in ways to manage earnings.