기업특성에 따른 해외진출과 이익의 질

This paper examines the effect of corporate international diversification on earnings quality for Korean firms. Corporate international diversification is defined as a firm’s strategy by which a firm conducts its businesses in multiple countries at the same time. More internationally diversified firms may have little earnings persistence, because of volatility of earnings and/or more management problem by communication gap between the head office and overseas branch. We expect that earnigs quality are affected by internationalization level negatively. We use overseas sales and asset abroad as proxies for the internationalization level. We also use earnings persistence, earnings deviation, and current residual as a proxy for earnings quality. The sample consists of non-banking firms(3,055 firm-years) listed in Korean Stock Exchange over 2001-2007. We find that the level of corporate international diversification measured by the ratio of overseas sales (or assets abroad) to total sales (or assets) is negatively associated with earnings quality, even after using well-known firm characteristics as controlling variables. The additional results show that the interaction variables of internationalization level and dummy variables that equal 1, if a major firm or high foreign ownership influence earnings quality positively. Thus, we conclude that more internationally diversified Korean firms decrease their earnigs quailty. This is the first study to examine the effect of corporate international diversification on earnings quality for Korean firms. We believe that our empirical evidence may shed some lights on the potential and various effects of corporate international diversification.