생산활동 조절에 따른 과대생산과 미래 경영성과와의 관련성

This paper examines how the production balancing and the fixed manufacturing cost ratio affect the association between overproduction and future financial performance. The production balancing means current period’s overproduction(or underproduction) is reversed next period as underproduction(or overproduction). Overproduction unmatched by sales increases inventory holding costs as a result of increased ending inventory and hampers optimal production decisions in the future. Therefore, overproduction will affect negatively future earnings. If firms with overproduction in the current period reduce their inventory to the optimal level by underproducing in the next period, the negative effects of overproduction on the future earnings will be lessened. Firms with the production balancing experience smaller decline of future earnings than firms without the production balancing. Firms can lower fixed costs per unit and boost their earnings by overproducing in the current year. The positive impact of overproduction on current earnings will be reversed in future periods. The negative effect of overproduction on future earnings is expected to be higher for the firms with high fixed manufacturing cost ratio than those with low fixed cost ratio. The sample consists of 5,496 manufacturing firm-years on Korean Stock Exchange from 1994 to 2011. Empirical results are as follows:First, firms with the production balancing do not experience significant decline of future earnings while firms without he production balancing do experience significant decline of future earnings by current overproduction. Second, firms with high fixed cost ratio experience more negative future earnings by current overproduction than firms with low fixed cost ratio. The results of this study may be helpful for firms' decision makers to plan firms' production decisions and for financial analysts and accounting academics to analyze firms' profitability and to predict future earnings.