감사품질과 신용등급의 기업이익조정에 대한 정보효과

This article considers the information effect of credit rating and audit quality on firm’s earnings management. Unlike preceding papers focusing earnings management by accrual, this paper examines the relation between real activity earnings management measure(thereafter, REM, ACFO, APC, ADE). This paper uses Big4 auditors as proxy for audit quality. the role of auditing in ensuring the appropriateness of financial statements has come under considerable scrutiny because of recent audit failure and earnings management. in this context, audit quality has been associated with auditor size. previous studies reported that Big4 auditor increase the audit quality. High credit rating of a business in the mordern society can not only help financing but also save financing cost. High credit rating can be an effective tool to enhance credibility of a company in the economic and social environment in which recognition of credit assessment is improved. in this context, it is expected that companies may have an incentive to earnings management as high as possible to get higher credit rating. The samples used in this study are 5,061 firms registered in Korean Stock Exchange from 2005 to 2010 excluding financial and insurance business. Our results also show that the abnormal costs of manufacturing, out of earnings management measures through real activities manipulation, had positive relation with credit rating of companies as expected. Abnormal cash flows from operation and abnormal discretionary costs, which are other earnings management measures through real activities manipulation, had different regression coefficients from expcted credit rating. Abnormal cash flows from operation showed significant coefficients. But abnormal discretionary costs showed insignificant coefficients. The information effects of audit quality on earnings management measures through real activities manipulation, showed insignificant coefficients.