부채의 특성에 따른 이익조정

Firms raise funds through multiple sources such as stock issuance, public debt (i.e., corporate bond) issuance, or private debt contracts (i.e., loan), in order to finance investment and to cover operating shortfalls. This study investigates whether the types of debt financing (i.e., public versus private debt) are associated with the firms' tendency to manage earnings. The different debt financing methods can have differential effects on firms' incentive to manage earnings. In private debt contract, creditors can directly control and monitor the firm, which may reduce the firm's incentive to manipulate earning. In contrast, public debt are traded in the capital market, which implies that the effect of monitoring depends on the efficiency of capital market. The efficiency depends on the role of market intermediaries, such as analysts or credit rating agencies. If the market is efficient enough, the monitoring effect of the efficient market is likely to restrict firms' incentive to manipulate earnings. As a result, it is an empirical question if the magnitude of the earnings management differs between firms issue private and public debts. To proxy for the degree of earnings management, we use both accrual-based earnings management, that was extensively covered in prior studies, and real activity-based earnings management. Accrual-based earnings management is measured by cross-sectional version of modified Jones model (Dechow et al. 1995) and real activity-based earnings management is measured by cross-sectional version of Roychowdhury's (2006) model. We use the ratio of corporate bond to total assets to measure the public debt and the ratio of loan to total assets to measure the private debt. The empirical analyses are conducted with a 2,053 firm-year observations from the firms listed in the Korea Stock Exchange from 2000 to 2009. We find that firms with relatively more public debts are less likely to engage in both real- and accrual-based earnings management, compared with firms with relatively higher proportion of private debts. In addition, the level of private debts are also positively associated with the level of both real- and accrual-based earnings management. The results is robust after controlling for endogeneity between bond issuance and level of earnings management. These finding suggest that, in the case of public debt issuances, the capital market plays an important role to minimize information asymmetry, which reduce the firms' incentives to manage earnings.