내부회계관리제도의 도입과 취약점 보고가 이연법인세 정보를 이용한 이익조정에 미치는 영향

This study is to examine the effects of internal control system on earnings management behavior proxied by deferred tax information. That is, this study tests whether firms decrease earnings management behavior after implementing internal control system, and whether firms reporting material weaknesses in the internal control system manage earnings more than firms reporting no material weakness in the internal control system. The results show that managers decrease deferred tax since the year 2005 when firms have been required to implement internal control system and to evaluate the effectiveness of their internal control system. In addition, the results show that firms reporting material weaknesses in the internal control system increase deferred tax, compared to firms reporting no material weakness in the internal control system. These results provide evidence that reliability of earnings information has improved due to internal control system and that effective internal control system could further enhance reliability of earnings information. The findings of this study contribute to current research by providing empirical evidence of usefulness of deferred tax information in detecting earnings management. Deferred tax based measures are easier to identify than accruals based measures by investors and other capital market participants. This study also contributes by providing more generalizable evidence with expanded sample period covering beyond early years of implementing internal control system.