대리인비용과 보수주의 관련성

The information asymmetry that exists between shareholders and the managers is generally considered to be a agency problem. Agency costs mainly arise due to the divergence of control, seperation of ownership and control and the different objectives rather than shareholder maximization the managers consider. Efficient mechanism that constrains agency cost is necessary because the agency problem lowers the market value of the firm(Jensen and Meckling 1976; Borsch- Supan and Koke 2002). Numerous researchers advance a number of explanations for conservative reporting; all of them suggest that conservatism benefits users of the firm's accounting reports (Watts 2003 ; Bhattacharya et al. 2003 ; Basu 1997). One explanation is that conservatism constrains managers' opportunistic behaviors that attempt to overstate assets and net income for managerial entrenchment. The other explanation is that potential litigation costs might be reduced by conservatism choice. Final explanation is that conservatism is the asymmetrical verification requirements for gains and losses. This interpretation allows for degrees of conservatism: the greater the difference in degree of verification required for gains versus losses, the greater the conservatism. Given that, conservatism is accompanied by efficient financial reporting that are good as implied by various statements by accounting regulators. In that sense, conservatism is an efficient contracting mechanism. According to LaFond and Roychowdhury(2008), conservatism reduces the incentive of accounting manipulation and so reduces the agency problem as potential mechanism and increases the firm value and cash flow. LaFond and Watts(2008) show that the greater information asymmetry, the more conservative the firms' financial statements. These arguments suggest that conservatism is a potentially useful tool for mangers in mitigating the agency problem and they are likely to demand more conservative accounting. In this study setting, conservatism is measured using Basu's specification (1997): the asymmetric timeliness coefficient is used to measure the degree of conditional conservatism, which is of primary interest in this paper. As agency costs increase, earnings become less timely in recognizing good news and more asymmetrically timely in recognizing bad news. There is greater asymmetry in the verification standards for recognizing good news as gains than bad news as losses as agency costs increase. The sample selection procedure is summarized as following. We draw an initial sample of firms listed on the Korean Stock Exchange over the period of 2000-2008. We obtain data on conservatism by searching through KIS-Value databases. Among these, all non-financial firms that satisfy all of the following criteria are selected: (1) fiscal year ending December 31, (2) availability of relevant financial data. Final sample consists of 4,366 firm-years. In this paper, we hypothesize that the agency cost generates conservatism in financial statements. In specific, we investigate the relationship between the agency cost and the conservativeness of accounting information in the entire sample. And then, after dividing into the large firms and the small firms, the chaebol and non-chaebol firms, this study examines the effect of the agency cost on financial reporting conservatism. We continue to examine the impact of the agency cost on the accounting conservatism by relying on the firm’s credit score and the ratio of major shareholders. Consistent with this hypothesis, we find strong evidence that the asymmetric recognition of gains and losses in the current financial statements is increasing the level of agency cost. Our empirical tests are consistent with our proposition that the agency cost is significantly positively related to conservatism. More important, we find that the degrees of conservatism for the large firms and the chaebol firms are significantly higher than those for firms with low agency problem such as the small firms and the non-chaebol firms. These results strongly support the view that greater agency problem increases the demand of conservatism. We also find that the firms with the lower KIS financial scores report more conservative accounting information because the firms with the lower credit rating are likely to curb the increase of agency costs. Additionally, in terms of governance we show that firms with the lower ratios of major shareholders report significantly more conservative accounting information. Overall, our results suggest that financial reporting conservatism is one potential mechanism to diminish these agency costs. This study thus provides evidence of a demand for conservatism from the shareholders. Supporting our hypothesis, we find that the likelihood of conservatism is positively associated with the agency cost, particularly when there exists greater information asymmetry.