자기주식매입 기업의 이익조정에 관한 연구

This study examines earnings management of stock repurchase firms in korean stock market to find motive and intent of managing earings before the announcement of repurchase. Previous studies have tried to investigate earings management of repurchase firms finding the mixed results which some those increase and others decrease earings prior to announcement of repurchase. The major difference from previous researches is focusing cash flow form operating(CFO) which is closely related to earnings management. I hypothesize that repurchase firms have different motives of earnings management according to the level of CFO. Repurchase firms with high CFO tend to deflate earnings before buyback because of reducing further repurchasing price. Repurchase firms with low CFO are likely to inflate earnings, which helps to support poor stock price -generally most repurchase firms experience poor stock performance. I select the matching firms using subsequent matching procedure. For each sample firm, I select non-repurchase firms from the same industry of each sample firms with asset-scaled CFO closest to that of the repurchaser in year -1. The comparison between sample firms and matching firms shows that repurchase firms with low CFO boost earnings prior to announcement year but those with high CFO do not decrease earnings. The repurchaser with high CFO choose to get positive effect from disgorging free cash flow(FCF) instead of deflating earnigs. Repurchase firms do not decrease earnings to disgorge FCF. Free cash flow(FCF) hypothesis help to explain the result that repurchase firms with high CFO do not manage earings. Managers utilize up-ward earings management to inform positive information into the stock market or to pretend to be good performer. To distinguish the managerial intents, I examine the change of CFO and operate an additional regression analysis. Low CFO samples do not show the improvement of CFO following repurchase year. It implicate up-ward earnings management as false signaling by managers. The change of CFO from prior year to announcement year is regressed by discretionary total accruals(DTAC) prior to announcement year and discretionary total accruals(DTAC) at the announcement year. The value of coefficient on DTAC at the announcement year is higher than that prior to the announcement year. This suggests the prior DTAC is not related the improvement of CFO after following repurchase. The findings of this study are as follows. First, all repurchase firms do not like to manage earings before buyback transaction. Only repurchase firms facing poor CFO have a motive to manage earnings upward. Second, The managerial intent of upward earnings by those firms is not to give signaling positive future information into outside investors. In other words,earnings management by repurchaser with poor CFO is regarded as false signaling based on managerial opportunistic behavior.