집단소송제의 도입이 보수주의에 미친 영향 - 임원배상책임보험 가입 여부에 따라

The paper examines whether the enactment of the Securities Class Actions in Korea affects the managers' choice in accounting conservatism. We investigate if there is a change in the degree of conservatism before and after the full-fledged implementation of the Securities Class Actions in 2007. We use the conservatism measure developed by Ball and Shivakumar(2006). We also investigate whether the coverage of directors and officers liability insurance affects the degree of conservatism before and after the full-fledged implementation of the law. Managers are expected to have more incentives to increase the conservatism in financial reporting to decrease the potential litigation cost as the litigation risk increases. There are two opposing arguments on the effect of D&O insurance coverage on the conservatism. On the one hand, firms covered by D&O insurance might pay less attention to potential lawsuits and thus report less conservative financial statements because firms' managers are subject to less personal legal liabilities. On the other hand, firms covered by D&O insurance might tend to report more conservative statements since insurance policies are most likely purchased by more conservative firms and insurance companies generally monitor the policy holders more extensively. Our empirical results show that the Securities Class Actions of 2007 enhanced the accounting conservatism of the firms listed in Korean stock exchange. We also find that firms without D&O insurance coverage report more conservative accounting information than firms with the coverage after the Securities Class Actions were enacted in 2007. The finding implies that D&O insurance may attenuate the managers' attention to potential lawsuits and thus reduce the degree of accounting conservatism. The paper contributes to the extant literature by providing additional evidences that can be used for the basis of the Securities Class Actions evaluation after four years of the law enactment.