국제회계기준 도입 전·후 이익조정과 감사투입시간의 영향에 대한 연구

This study examines the impact of International Financial Reporting Standards (IFRS) adoption on earnings management and the role of auditor’s abnormal audit hours. In 2011, Korea adopted IFRS requiring all publicly traded firms disclose their financial reports prepared following IFRS and electronically file their financial reports with the Financial Supervisor Services(FSS). One of the primary reasons for Korean government adopted IFRS was to increase accounting transparency and relevancy and, therefore, improve the national credibility of financial information. The role of external auditors is expected to become more significant after the IFRS adoption. In particular, this study examines changes in discretionary accruals, a proxy for earnings management, before and after the IFRS adoption. This change would be different depending on the amount of audit efforts. Audit efforts are measured as the abnormal hours auditors spent. We find that external auditors’ abnormal efforts became more important after the IFRS adoption as IFRS allows managers more discretion and judgements. This would be mainly because IFRS is principle based accounting standards while former Korean Generally Accepted Accounting Principles(GAAP) was rule based accounting standards. The effect of IFRS adoption on earnings management or earnings quality is of great interests among regulators and various interested partied surrounding firms. Thus, the results of this study are expected to provide useful implication for regulators and the interested parties of firms and add to the existing related literature. This study uses the Performance-Matched Modified Jones Models suggested by Kothari et al.(2005) as a proxy for earnings management. The variables of interests in this study are an indicator representing the year of IFRS adoption and abnormal audit hours, residuals from an audit hour determinants model. The IFRS indicator is used as a proxy for the change in accounting environment while the abnormal audit hour is used as a proxy for auditors’ additional efforts beyond the level predicted. Using 2,733 firm-year data in years 2010 and 2011, the results of this study show that discretionary accruals have significantly decreased after the adoption of IFRS. The results also show that the negative association between discretionary accruals and the adoption of IFRS becomes more significant as abnormal audit hours increase. When the sample is divided into positive and negative discretionary accruals, IFRS adoption and the interaction between IFRS and abnormal audit hours are significant only with firms having positive discretionary accruals. This results may suggest that the adoption of IFRS and abnormal audit hours have been effective in reducing income increasing earnings management. Additional analyses show that the provision of IFRS consultation by external auditors has not significantly affected discretionary accruals and show that discretionary accruals after the adoption increase when controlling shareholders’ ownership increases. With the increased public concerns over the quality of financial reporting as a result of the adoption of IFRS, this study provides one of the first evidences that IFRS works as it originally intended. This study also provides evidence that additional efforts by external auditors are important in reducing managers’ discretion over financial reporting.