코스닥 시장 우회상장 기업의 이익조정

Backdoor listing refers to the process by which non-listed firms acquire listing status at stock exchanges bypassing the rigorous review procedures required under IPO. The stockholders of a non-listed firm obtain the ownership of listed firm normally through M&A, equity swaps, and other forms of equity trading. Backdoor listing provides promising growth firms with the opportunity to readily access capital markets for efficient fund-raising. Major advantages of backdoor listing include the facilitation of M&A among listed and non-listed companies to help boost efficient market restructuring, and reduction in time and resources needed for non-listed companies to pass the huddle of IPO reviews, thereby mitigating costs associated with the listing procedures. On the other hand, backdoor listing may allow ineligible non-listed firms to access capital market without eligibility test and to engage in fraudulent stock trading afterwards which may cause detrimental effects on market participants' welfare and the reliability of market as a whole. Financially unhealthy non-listed firms attempting to take advantage of the listing opportunity are likely to engage in pernicious earnings management with the view to uplift their stock prices. This tendency is likely to exacerbate for firms characterized by poor intrinsic values. The objective of this study is to investigate the earnings management behavior surrounding the time of listing of firms entering the KOSDAQ market via backdoor listing. More specifically, we test whether the backdoor listing firms tend to engage in upward earnings management using accruals and real activities before and after they achieve listing status. We, then, dichotomize our sample into financially healthy and unhealthy groups, and examine if the extent of earnings management tends to differ between the two groups. We test if the pernicious earnings management surrounding the time of listing is more likely to be led by firms with poor intrinsic value, rather than by majority of backdoor listing firms. In addition, we further compare the level of earnings management of backdoor listing groups with that of IPO firms during the same period. Finally, we conduct survival analyses to measure the probabilities of delisting for high versus low intrinsic value backdoor listing firms. We compare the delisting probabilities of two backdoor listing samples with that of IPO firms to determine if financially unhealthy backdoor listing firms are to blame for early delisting, which causes heavy losses to the capital market and to the society at large. In this study, we analyzed 66 backdoor listing firms and 144 IPO firms which entered the KOSDAQ market during the period from June 2006 to the end of 2010. The number of observations subject to various tests are 276 and 556 firm-years for backdoor listing and IPO samples respectively across the 5 year sample period. Major test results are summarized as follows. Firstly, the firms entering the KOSDAQ market via backdoor listing, in general, tend to inflate reported earnings by means both of accruals and real activities right before the listing year, which suggest that the backdoor listing firms engage in opportunistic earnings management with a view to uplifting their market values. Secondly, as we decompose backdoor listing sample according to the level of ROE, the evidence of significant earnings management is observed only from low ROE subsample, which is significantly higher than the earnings management metrics obtained from high ROE group as well IPO sample. The difference in the level of earnings management between high ROE group and IPO sample is not statistically significant. These results indicate that the pernicious earnings management surrounding backdoor listing is mainly led by financially unhealthy non-listed firms, with the intention of taking advantage of backdoor listing to pursue their opportunistic motives. Thirdly, backdoor listing sample with low ROE turns out to be associated with higher delisting probability, which suggests that unhealthy firms entering the capital market via backdoor listing are more likely to be expelled early from the market relative to their healthy counterparts. The afore-mentioned results provide meaningful empirical evidence corroborating that financially unhealthy non-listed firms are the main culprits behind pernicious earnings management surrounding their backdoor listing and subsequent early delisting, which disrupt orderly market system, causing significant social cost in general. Our study is expected to provide clues useful for searching policy directions which intend to ameliorate adverse side effects of the current backdoor listing regime. In sum, the regulatory authorities and enforcement bodies need to exercise caution in deliberating more stringent review procedures so that financially healthy and promising candidates are properly segregated from their poor and risky counterparts, thus enhancing the beneficial effects, while mitigating adverse side effects of the system.